The Biden Administration’s Impact on Student Loan Debt
The Biden-Harris Administration has made significant strides in addressing the student loan debt crisis in the United States. Recently, they announced the approval of an additional $4.8 billion in student loan debt relief for 80,300 borrowers. This latest move is part of a series of actions that have collectively resulted in nearly $132 billion in loan forgiveness for over 3.6 million Americans. Contact Los Angeles bankruptcy attorneys Wadhwani & Shanfeld to discuss how the details of these developments affect you as a student loan borrower.
On December 6, 2023, The Biden-Harris Administration announced the recent approval of $4.8 billion in debt relief is categorized into two main areas: fixes to income-driven repayment (IDR) forgiveness and Public Service Loan Forgiveness (PSLF). These efforts are aimed at correcting systemic issues in the student loan system and providing relief to those who have long been eligible but are unable to access it.
Total Debt Cancellation
Under the Biden-Harris Administration, the total approved debt cancellation now stands at nearly $132 billion, impacting more than 3.6 million borrowers. This level of debt relief is unparalleled in U.S. history.
Breakdown of the Debt Relief
Income-Driven Repayment (IDR) Forgiveness: The Administration has approved almost $44 billion in IDR relief for nearly 901,000 borrowers. This includes a $2.2 billion discharge for nearly 46,000 borrowers in the latest round. The focus has been on providing borrowers with an accurate count of progress toward forgiveness and addressing the misuse of forbearance.
Public Service Loan Forgiveness (PSLF): The PSLF program has seen a total of $53.5 billion in relief for almost 750,000 borrowers since October 2021. This includes the recent $2.6 billion for 34,400 borrowers. The expansion of PSLF contrasts starkly with the mere 7,000 borrowers who had received forgiveness through these programs at the start of the Biden-Harris Administration.
Historic Steps to Reduce Student Debt Burden
Launch of the SAVE Plan: The Administration introduced the SAVE repayment plan, touted as the most affordable student loan repayment option. It offers low monthly payments, sometimes as low as $0, and prevents balance growth due to unpaid interest.
Increase in Pell Grants: The largest increase in Pell Grants in a decade was secured, providing more financial aid to students in need.
New Rules for Career Programs: New regulations have been finalized to protect borrowers from career programs that leave graduates with unmanageable debts or insufficient earnings.
Alternative Paths to Debt Relief: Following the Supreme Court decision on the original student debt relief plan, the Administration is exploring alternative avenues for debt relief under the Higher Education Act.
Additional Relief Measures
Relief for Borrowers with Disabilities: The Administration has approved $11.7 billion in relief for almost 513,000 borrowers with a total and permanent disability.
Relief for Defrauded Borrowers: An additional $22.5 billion has been approved for more than 1.3 million borrowers who were defrauded by their schools, experienced sudden school closures, or are covered by related court settlements.
Implications for Borrowers
Access to Relief: Eligible borrowers, especially those in public service roles or on income-driven repayment plans, may find it easier to access the debt relief they rightfully earned.
Long-Term Impact: These measures are expected to significantly alleviate the financial burden of student loans, allowing many borrowers to pursue opportunities without the weight of debt.
Continued Advocacy: The Biden-Harris Administration’s efforts signal a strong commitment to reforming the student loan system and providing much-needed relief to borrowers.
Contact Wadhwani & Shanfeld
The Biden-Harris Administration’s actions represent a significant shift in addressing the student loan debt crisis in the United States. With nearly $132 billion in loan forgiveness already approved, the impact on individual borrowers and the broader economy is substantial. These measures not only provide immediate financial relief but also pave the way for a more equitable and manageable student loan system. As the Administration continues to explore further avenues for debt relief, it remains a beacon of hope for millions of Americans struggling with student loan debt. Contact the bankruptcy attorneys at Wadhwani & Shanfeld to discuss how we can help you manage your debt, including student loans.