Personal finance

Biden administration to forgive $7.7 billion in student debt for more than 160,000 borrowers

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U.S. President Joe Biden delivers remarks regarding student loan debt forgiveness in the Roosevelt Room of the White House on Wednesday August 24, 2022.
Demetrius Freeman | The Washington Post | Getty Images

The Biden administration said on Wednesday that it would forgive $7.7 billion in student loans for more than 160,000 borrowers, its latest effort to reduce the burden of education debt on households.

The relief is a result of the U.S. Department of Education’s improvements to its income-driven repayment plans and Public Service Loan Forgiveness program.

“The Biden-Harris Administration remains persistent about our efforts to bring student debt relief to millions more across the country,” said Education Secretary Miguel Cardona in a statement.

Wednesday’s loan forgiveness includes $5.2 billion for 66,900 borrowers pursuing Public Service Loan Forgiveness, and $1.9 billion for 39,200 people enrolled in income-driven repayment plans.

Another $613 million will go to 54,300 borrowers under the Biden administration’s new income-driven repayment option, known as the Saving on a Valuable Education, or SAVE, plan. That option leads to student loan forgiveness after 10 years for those who originally borrowed $12,000 or less.

Forgiveness total reaches $167 billion

After the Supreme Court struck down President Joe Biden’s sweeping student debt cancellation plan last summer, the White House has been exploring its existing authority to reduce borrowers’ balances. One area it has found fruitful: the Education Department’s already established but hard to access loan forgiveness options.

Including Wednesday’s round of relief, the Biden administration has so far excused the debt of 4.75 million borrowers, totaling $167 billion in aid. Much of that total comes from expanding the reach of and making fixes to these programs.

Historically, borrowers found these aid options were hard if not impossible to navigate, and many complained they weren’t receiving the relief to which they were entitled, consumer advocates say.

For example, income-driven repayment plans lead to loan erasure after a certain period, but the Education Department often didn’t have a proper accounting of borrowers’ timeline, reports found. The department said in 2022 it would review these accounts.

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