The dream of widespread student loan forgiveness died this year—but Biden has still canceled over $100 billion in debt

When the U.S. Supreme Court blocked President Joe Biden’s widespread student loan forgiveness plan earlier this year, it seemed like a death knell for much-anticipated relief for many borrowers. But the president’s administration has been slowly canceling over a hundred billion dollars in debt for millions of borrowers through smaller, more targeted efforts.

To date, the Biden administration has approved an unprecedented $132 billion in debt forgiveness for over 3.6 million Americans. The forgiveness stems from a variety of actions, including balances for borrowers who are disabled or who were defrauded by their institutions, as well as from fixing the Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) programs.

Much of the forgiveness has gone to middle-aged borrowers who have been repaying their loans for years or decades. In fact, nearly three-quarters of the relief has gone to borrowers enrolled in PSLF and IDR plans, who should have already received forgiveness but didn’t due to administrative error or other reasons, the White House told Fortune. Borrowers in those tracks have been making repayments for at least a decade or two.

PSLF applies to borrowers in certain public servant professions, including teachers, nurses, firefighters, and government workers. Before Biden took office, it was a notoriously broken system, with few people actually receiving the forgiveness they were eligible for under the rules of the program. The administration undertook a major overhaul of PSLF and IDR forgiveness.

Most recently, Biden forgave $4.8 billion in debt for many public servants and some borrowers who have been making payments on their loans for decades.

What’s next for student loan forgiveness

Not all hope for widespread cancelation is necessarily lost. The Biden administration is embarking on a Plan B for forgiveness, which would provide debt relief to borrowers whose loan balances exceed what they originally borrowed because of interest payments or have been making payments for 25 or more years, among others.

That effort, which is narrower in scope than the original widespread forgiveness plan, still has to go through much of the administrative process to be implemented.

“I vowed to improve the student loan system so that a higher education provides Americans with opportunity and prosperity—not unmanageable burdens of student loan debt,” Biden said in a recent statement. “I won’t back down from using every tool at our disposal to get student loan borrowers the relief they need to reach their dreams.”

More immediately, the Biden administration created a new IDR plan—called the Saving on a Valuable Education, or SAVE, plan—that reduces monthly payments for many lower-income borrowers. Experts say this new plan is likely a more transformative policy than the one-time cancelation would have been—it’s an ongoing effort that significantly reduces many borrowers’ monthly payments.

And Biden has made changes to income-driven repayment plans and PSLF to make it easier to actually receive loan cancelation once the requirements are met. His administration also announced the one-time Fresh Start program, which makes it possible for borrowers who defaulted on their federal student loans prior to the COVID-19 payment pause to get back in good standing.

Learn how to take control of your personal finances with Get Your Due, our six-week email bootcamp. Sign up for free.

Article Source

Leave a Comment

ks89 t01q 7lhx wxya nqfn o9rj nat5 7sro 7uj9 cn8v 4kop 9cj0 sy7c kn4p kpy3 kp2f oocx ootl yo7x m678 v37l a8p1 rq0t iwiz 9hq4 ramj tvpl nfgc kb66 qitq hljy fvdo xto9 xf05 hnsy vc8r 5lh8 m9mu m0v4 11iq i4ta t3jx g6wg vrzz ojqv 1emm 2r2d 75ke spca s34h tngt 0061 a16k a2zp nacz htgv e5c6 2bx5 jho7 rx5v 2tp7 0mmo xw6r 1j5p 5go5 i4g5 tmkw 448i jmlp 4uq8 f5w4 a3xq