Personal finance

Biden administration to forgive $7.4 billion in student debt for another 277,000 borrowers

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U.S. President Joe Biden speaks about student loan debt forgiveness in the Roosevelt Room of the White House in Washington, D.C., on Aug. 24, 2022.
Evan Vucci | AP

The Biden administration announced Friday that it will forgive $7.4 billion in student debt for 277,000 borrowers.

The latest round of loan cancellations is a result of the U.S. Department of Education’s recent changes and improved oversight of income-driven repayment plans and the popular Public Service Loan Forgiveness program.

“As long as there are people with overwhelming student loan debt competing with basic needs such as food and healthcare, we will remain relentless in our pursuit to bring relief to millions across the country,” U.S. Secretary of Education Miguel Cardona said in a statement.

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Here is who benefits from this round of forgiveness

In this round of forgiveness, more than 206,000 borrowers will collectively get $3.6 billion in debt erased through the Biden administration’s new Saving on a Valuable Education, or SAVE, plan, due to the provision that allows for debt forgiveness after shorter periods than other income-driven repayment plans for those who originally took out small amounts for college.

More than 65,000 borrowers will have their loans canceled through fixes to the Department of Education’s income-driven repayment plans, and 4,600 borrowers are benefiting from the improvements to the government’s loan forgiveness program for public servants. Aid for these groups in this round of forgiveness amounts to $3.5 billion and $300 million, respectively.

Biden‘s 2020 campaign promise to erase student debt was thwarted at the Supreme Court last June. The conservative justices ruled that Biden’s $400 billion loan cancellation plan was unconstitutional.

After that, the president directed the Department of Education to examine its existing authority to reduce and eliminate students’ debts. Mainly by improving current loan relief programs, the department has cleared the federal education loans of 4.3 million people, totaling $153 billion in aid, while Biden has been in office.

The president also rolled out his wide-scale student loan forgiveness do-over plan earlier this week.

This is breaking news. Please check back for updates.

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