Biden Cancels $7 Billion in Student Debt in Election-Year Push

(Bloomberg) — President Joe Biden will forgive $7.4 billion in federal student debt in his latest push to provide relief to borrowers and deliver on a campaign promise to ease the cost of higher education as he seeks reelection.

Approximately 277,000 Americans will have their loans canceled through regulatory changes the Department of Education is making to multiple existing federal programs. The majority of those eligible are enrolled in the government’s income-driven repayment plan, known as SAVE, which pledges to forgive borrowers after at least 10 years of loan repayments.

President Biden To Promote Student Loan ‘Plan B’ In Wisconsin College Town

Discharges worth $3.6 billion in relief will go to 207,000 borrowers who met requirements under the SAVE plan, Education Secretary Miguel Cardona told reporters. Others who qualify for Friday’s relief include individuals enrolled in the government’s public-service loan forgiveness program and beneficiaries of adjustments to income-driven repayment plans.

More than 65,000 people will receive assistance through those adjustments, which will count certain months of non-payment or forbearance toward totals for forgiveness. Meanwhile, 4,600 public servants, such as teachers and nurses, will also see loans canceled.

Under Biden, the Education Department has incrementally forgiven $153 billion in loans for 4 million Americans, including those defrauded by their schools. Existing federal programs for debt relief have historically been difficult to access, in part due to failures by student-loan servicers, lengthy paperwork requirements and mismanagement by the department.

Biden has been forced to adopt a piecemeal approach to loan forgiveness after his broader $400 billion plan that aimed to cancel up to $20,000 in loans for roughly 40 million people was overturned by the US Supreme Court. Biden campaigned on loan forgiveness in 2020, and the high court ruling sparked disappointment among Black, Latino and young voters — Democratic voting blocs crucial to his reelection prospects against Republican Donald Trump.

Earlier: Biden Details Student Loan ‘Plan B’ as He Woos Young Voters

The White House has stepped up their messaging on student loans, shining a spotlight on each incremental round of relief. On Monday, Biden detailed a “Plan B” to again try and offer broader student-debt forgiveness with a trip to Madison, Wisconsin — a college town in a critical 2024 battleground state.

That plan would see loans reduced or wiped out for more than 25 million borrowers, but it must first undergo a lengthy regulatory process and faces likely legal challenges that could stretch past the general election in November into next year.

Most Read from Bloomberg

©2024 Bloomberg L.P.