President Joe Biden announced another wave of federal student loan forgiveness on Wednesday as borrowers brace for payments to restart after a three-year pause that began during the COVID-19 pandemic.
The president's latest step will help 125,000 borrowers by erasing $9 billion in debt through existing relief programs. In total, 3.6 million borrowers will have had $127 billion in debt wiped out since Biden took office.
“President Biden has long believed that college should be a ticket to the middle class, not a burden that weighs on families,” the White House said in a statement.
He's been relying on a patchwork of different programs to chip away at debt. The relief was approved for three types of borrowers:
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- Public Service Loan Foregiveness Program
- Income-Driven Repayment: These are borrowers who made 20 years or more of payments but never got the relief they were entitled to.
- Total and Permanent Disabilities: Borrowers who have a total or permanent disability who have been identified and approved for discharge through a data match with the Social Security Administration.
“For years, millions of eligible borrowers were unable to access the student debt relief they qualified for, but that’s all changed thanks to President Biden and this administration’s relentless efforts to fix the broken student loan system,” Education Secretary Miguel Cardona said in a statement.
Biden was scheduled to make a formal announcement at the White House in the afternoon.
He promised to help alleviate the burden of student debt while running for president, and he's been under pressure to follow through even though his original plan was overturned by the conservative majority on the U.S. Supreme Court.
Additional debt forgiveness could help alleviate the impact of the long-scheduled resumption of loan payments this month, which will put a dent in tens of millions of family budgets. But it is unlikely to undermine the economy's strength in the long term even though analysts at BNP Paribas estimated it could take $100 billion out of consumers' pockets and slow overall growth during the final three months of this year.
Republicans have fought Biden's plans on student debt, but Wednesday's announcement comes as they're consumed by infighting on Capitol Hill. Hard-right Republicans forced a vote that ousted Rep. Kevin McCarthy as House speaker, leaving the chamber in chaos.
In addition, the NAACP is pushing Biden to expand debt forgiveness by allowing Parent PLUS loans, which parents use for their children's college education, to be eligible for the SAVE Plan.
"Historically, education has been viewed as an entry point for marginalized communities to achieve upward mobility and begin building generational wealth," NAACP President Derrick Johnson said in a statement that emphasized the disproportionate impact of debt on Black families. “It is unconscionable that, in their quest to provide their children with a brighter future, Black parents have fallen victim to a system that preys on their inherent disadvantage.”
