The Biden Administration Has Forgiven Another $1.2 Billion in Federal Student Loans
This new wave of forgiveness shows how Biden can keep canceling student loans, even after his defeat at the Supreme Court last year.
On Wednesday, the Biden Administration announced $1.2 billion in additional student loan forgiveness for more than 150,000 borrowers. This particular round of forgiveness was previously announced last month, though the exact cost of the debt relief was not previously known.
"The Biden-Harris Administration has now approved nearly $138 billion in student debt cancellation for almost 3.9 million borrowers through more than two dozen executive actions," a Wednesday press release stated. "From Day One of his Administration, President Biden vowed to fix the student loan system and make sure higher education is a pathway to the middle class—not a barrier to opportunity."
This latest slate of forgiveness is part of the Education Department's sweeping changes to how the federal government handles student loan repayment. As part of the Biden Administration's original attempt to forgive up to $20,000 in federal loans per borrower, they also made several major changes to other student loan programs. Most notably, they introduced the Saving on a Valuable Education (SAVE), a new income-driven repayment (IDR) program designed to be much more generous than previous IDR plans.
For example, under the REPAYE plan, which was the most popular IDR plan before SAVE replaced it, monthly payments were set at 10 percent of borrowers' discretionary income, defined as earnings above 150 percent of the federal poverty line, with forgiveness coming after 20 years of consistent payments.
For borrowers in the new SAVE plan, their monthly payment is only 5 percent of their discretionary income, which is now defined as income above 225 percent of the federal poverty line. If the borrower's balance is less than $12,000, they'll now get forgiveness after just 10 years.
As part of the SAVE plan rollout, the Education Department announced last month that any borrowers who have been paying back their loans for 10 years or more, under any program, and have a remaining balance of less than $12,000 can enroll in the SAVE plan and get automatic forgiveness. While the original announcement did not estimate how much forgiveness would be dolled out, Wednesday's update released the staggering $1.2 billion price tag.
This recent glut of loan forgiveness shows how, even if Biden's attempt at blanket loan forgiveness was defeated at the Supreme Court last year, that doesn't keep his administration from spending billions on student loan forgiveness. Biden's one-time student loan forgiveness proposal was estimated to cost taxpayers more than $500 billion, but the estimated cost of the SAVE plan over the next decade is almost as much, coming in at $475 billion.
While the Supreme Court halted Biden's most outrageous attempt to forgive massive amounts of federal student loans, the Education Department's wide authority to make sweeping changes to student loan policy means that widespread debt forgiveness—and the huge bill to taxpayers—is here to stay.
