‘I don’t see it as unfair’: President Joe Biden is canceling another $7.4B in student loans for 277,000 borrowers — as 18 states push to sue over the SAVE program

Biden admin forgives further student debts

The Biden administration has announced its plans for another round of relief for 277,000 student loan borrowers amid legal challenges from Republicans.

The latest wave cancels $7.4 billion in student loans, bringing the total debt relief approved by the Biden administration to $153 billion, according to the White House.

Don’t miss

• Commercial real estate has beaten the stock market for 25 years — but only the super rich could buy in. Here’s how even ordinary investors can become the landlord of Walmart, Whole Foods or Kroger
• Cost-of-living in America is still out of control — use these 3 ‘real assets’ to protect your wealth today, no matter what the US Fed does or says
• These 5 magic money moves will boost you up America’s net worth ladder in 2024 — and you can complete each step within minutes. Here’s how

But not everyone’s celebrating.

“You’re incentivizing people to not pay back student loans and at the same time penalizing and forcing people who did to subsidize those who didn’t,” Rep. John Moolenaar is reported to have said during a hearing last week, where Education Secretary Miguel Cardona testified about the Education Department’s budget request for next year.

“I don’t see it as unfair. I see it as we’re fixing something that’s broken,” Cardona responded. “We have better repayment plans now so we don’t have to be in the business of forgiving loans in the future.”

Who’s eligible for forgiveness?

Biden is persisting in his piecemeal approach to student loan forgiveness, after the Supreme Court struck down his original plans last year. On April 17, the administration announced its first draft of rules for forgiveness.

About 206,800 people who originally borrowed $12,000 or less and are enrolled in the new SAVE plan will receive the majority of relief, while an additional 65,000 enrolled in repayment plans will see reductions in the amounts they owe through “administrative adjustments.”

And another 4,600 borrowers are receiving relief through changes to Public Service Loan Forgiveness (PSLF).

The Education Department says these borrowers should expect to be notified by email and see their relief processed in the coming weeks.

Republican attorneys are pushing to axe the SAVE plan

Biden is still facing loud opposition from Republicans who have called his latest plans to forgive student debt a ploy to buy support from young voters ahead of this November’s election.

“The administration is tone deaf. There’s no other way to put it,” said Education and the Workforce Committee chairwoman Virginia Foxx (R-NC) in a statement, calling Biden’s plans an “illegal loan scheme.”

“What is absolutely maddening is that the administration is STILL not doing its job and instead focusing on its student loan shenanigans. “Enough is enough, Mr. President.”

In the meantime, 18 states are suing the Biden administration over the SAVE program in two separate lawsuits, claiming it undermines a separate cancellation program that promotes careers in public service.

That said, the lawsuits don’t address what would happen to borrowers who have already seen their debts wiped through the SAVE program. A court document filed by Kansas’ attorney general says it’s “unrealistic to think that any loan forgiveness that occurs during this litigation will ever be clawed back,” reports the Associated Press.

What to read next

• Jeff Bezos and Oprah Winfrey invest in this asset to keep their wealth safe— you may want to do the same in 2024
• ‘It’s not taxed at all’: Warren Buffett shares the ‘best investment’ you can make when battling rising costs — take advantage today
• Car insurance premiums in America are through the roof — and only getting worse. But 5 minutes could have you paying as little as $29/month

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.