Approval of Loan Forgiveness
This past Wednesday, the Biden administration announced that it would cancel $9 billion in student loans for 125,000 borrowers. This was made possible through the Department of Education’s “income-driven repayment (IDR) and Public Service Loan Forgiveness (PSLF), and granting automatic relief for borrowers with total and permanent disabilities.” To date, millions of Americans have had over $125 billion in student debt forgiven under the Biden administration.
What This Means for Borrowers
Because of this policy, a significant financial burden has been lifted or partially relieved from the shoulders of many deserving Americans. Specifically, 22,000 borrowers with disabilities have had their debt completely eliminated, uplifting an underrepresented and marginalized group.
The PSLF, offered through the Department of Education, specifically grants loan forgiveness to borrowers who are/have pursued a career with a qualifying non-profit or within government, including public school educators, for more than 10 years. The Biden administration has forgiven $5.3 billion under the PSLF program.
Furthermore, the restructured IDR plan, which allows people to shape their payment schedule and amount based on their annual income, has allowed for over $2.8 billion to be forgiven for almost 51,000 borrowers.
The Benefits of This Move
In the statement issued by the White House, the administration said that the forgiveness was done through the Higher Education Act because its previous, more expansive effort to forgive student loans was struck down by the U.S. Supreme Court. The Higher Education Act permits the government to utilize financial aid and money for those in need, granting President Biden the authority to make this historic move.
In a broader context, this financial relief will allow borrowers to invest more money into the economy, a necessity in the aftermath of the COVID-19 pandemic when consumers are experiencing historic levels of inflation, particularly with housing costs. This move benefits hundreds of thousands of Americans and the Biden administration has signaled that more student loan relief is on the way.
For more information on how to take advantage of these student loan forgiveness programs, check out the resources on our website or sign up for student debt clinics offered by AFT later this month.