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Four days into the payment resumption for federal student loan borrowers, President Joe Biden on Wednesday announced another $9 billion in debt forgiveness. Now, an additional 125,000 borrowers will see their debt erased through existing programs.
Most of the debt discharge is part of the Biden administration’s efforts to remediate the dysfunctions in student loan forgiveness through the Public Service Loan Forgiveness program and income-driven repayment (IDR) plans. The relief also includes debt cancellation for borrowers with total and permanent disabilities. The existing programs previously didn't count payments that should have otherwise qualified toward the totals needed for forgiveness.
Fixes include an adjustment that counts every month borrowers ever spent in student loan repayment or on pause toward forgiveness under income-driven repayment — even if borrowers never enrolled in an IDR plan. It takes 20 or 25 years under IDR for borrowers to get their remaining debt canceled. The adjustment also increases the number of payments counted toward Public Service Loan Forgiveness, which happens after 10 years worth of payments.
The first major wave of relief under this automatic account adjustment began in August with debt cancellation totaling $39 billion for 804,000 borrowers.
Borrowers with debt remaining have just begun to make payments after a three-and-a-half-year pause due to the pandemic. The Biden administration also recently unveiled a new income-driven repayment program called Saving on A Valuable Education (SAVE), which is expected to eventually cut student loan payment amounts and deliver student debt forgiveness sooner for borrowers with debt under $12,000.
How much student debt has been forgiven so far?
As of the second quarter of this year, there was at least $1.57 trillion in federal student loan debt, according to the Federal Reserve Bank of New York's most recent estimate.
So far, 3.6 million borrowers have had $127 billion in debt forgiven by the Biden administration, according to the White House. Here’s how cancellation has been distributed:
Approximately $42 billion for nearly 855,000 borrowers through an automatic adjustment to past payments under income-driven repayment plans, which forgives debt after 20 or 25 years worth of payments.
Nearly $51 billion for 715,000 borrowers working in public service through the Public Service Loan Forgiveness Program.
$11.7 billion for nearly 513,000 borrowers with a total and permanent disability.
$22.5 billion for more than 1.3 million borrowers who were defrauded by their schools or their schools closed.
The White House has created a new state-by-state breakdown of debt forgiveness delivered to borrowers.
Biden’s efforts to bring about widespread student loan cancellation were blocked by the Supreme Court on June 30. The administration says it will pursue a “Plan B” through the Higher Education Act.
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