NEWS
President Biden Announces Another $9 Billion in Student Debt Relief As Payments Resume
potus
President Joe Biden on Wednesday announced an additional $9 billion in student debt forgiveness as payments resume this month for the first time since being paused at the start of the COVID-19 pandemic.
Some 125,000 borrowers have been approved for debt relief under existing programs, including the Public Service Loan Forgiveness program. According to the White House, 53,000 borrowers will see $5.2 billion in debt relief under that program.
Another 51,000 borrowers who made 20 years or more of payments will see $2.8 billion in debt relief through changes to the income-driven repayment plan.
Nearly 22,000 borrowers with total or permanent disabilities with see $1.2 billion in debt discharged.
According to the White House, Wednesday’s move brings the total debt canceled by this administration to $127 billion for nearly 3.6 million Americans.
Biden, a Democrat, has promised to relieve the growing student debt burden in the U.S., but his original plan was struck down by the U.S. Supreme Court, which has a conservative majority.
The new SAVE, or Saving on a Valuable Education, plan targets an estimated 20 million borrowers who were not eligible for targeted debt relief.
Under the SAVE plan, payments are calculated based on income and family size, which will allow approved borrowers to reduce their monthly payments on undergraduate loans from 10% of disposable income to 5%.
For individual borrowers with an annual income less than about $32,000, monthly payments will be reduced to $0 until their income rises. For borrowers with a family of four, the annual income floor is about $67,000.
To achieve this, the Department of Education will stop charging any monthly interest not covered by the borrowers payment on the SAVE plan.
The administration said the average borrower will save about $1000 per year under the new repayment plan, which marks a step toward appeasing overburdened student borrowers without an across-the-board cancellation of student debts.
There is also an on-ramp for borrowers, as penalties for missed payments will not be enacted until October 2024. Interest will still accrue for borrowers who miss payments, but their accounts will not be labeled as delinquent, they will not have their wages garnished, and they will not be referred to debt collections.
The main problem with student debt is the continued rising costs of college education which have been double the rate of normal inflation, financial expert Ted Jenkin said.
Colleges and universities pay no real estate taxes and no federal income taxes yet the costs continue to skyrocket for working families across America. Relieving any kind of student debt is just a short-term Band-Aid and we will be right back where we started in 12 to 24 months with student debt being at all time highs.
TMX contributed to this article.
