U.S. Announces Additional Federal Student Loan Forgiveness to Combat ‘Unsustainable Debt’

by Ethan Kim
Federal Student Loan Forgiveness

President Joe Biden disclosed another installment of federal student loan forgiveness on Wednesday, aimed at alleviating the “unsustainable financial burden” that many individuals incur in pursuit of higher education.

The proclamation arrives as loan recipients prepare for the resumption of mandatory repayments following a three-year hiatus initiated amid the COVID-19 pandemic. Biden is concurrently striving to meet his electoral pledges concerning debt alleviation as he campaigns for a second term in office.

Through existing frameworks, the President’s most recent initiative will benefit approximately 125,000 borrowers by eliminating $9 billion in educational loans. Cumulatively, since Biden assumed the presidency, 3.6 million borrowers have seen a total of $127 billion in debt cancelled.

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  • 804,000 Long-term Borrowers to Have Student Loans Forgiven Ahead of Repayment Resumption This Autumn

“Work is still in progress,” stated Biden during a briefing in the Roosevelt Room at the White House.

While campaigning for the presidency, he had vowed to ease the strain of student loans and has faced mounting pressure to make good on these promises, despite his original proposal being nullified by the Supreme Court’s conservative majority.

Biden remarked that this judicial reversal effectively deprived millions of Americans of thousands of dollars in imminent student debt relief that could have significantly improved their financial conditions.

In an effort to methodically reduce debt, the administration has been utilizing an assortment of programs, including last year’s introduction of the SAVE Plan, which adjusts repayment amounts in correlation with the borrowers’ income levels.

“My administration is committed to expeditiously providing debt relief to as many borrowers as feasible,” commented Biden.

He added that, “Although higher education remains a pathway to improved quality of life, the cost of this pathway has become exorbitantly high. The growing trend is that Americans are weighed down by unsustainable debt in return for a college degree.”

Some endeavors by the Biden administration have focused on strengthening existing frameworks like the public service loan forgiveness program.

Education Secretary Miguel Cardona issued a statement saying, “For an extended period, millions of eligible borrowers could not access the student debt relief for which they were qualified. That has fundamentally changed due to relentless efforts from President Biden and this administration to amend a flawed student loan system.”

The prospect of further debt relief measures could soften the blow of the upcoming reactivation of loan repayments, which stands to impact the budgets of tens of millions of households. Analysts from BNP Paribas project that it could extract $100 billion from consumer spending and moderate overall economic expansion in the final quarter of the year. However, it is not expected to significantly weaken long-term economic robustness.

Political opponents have resisted Biden’s strategies regarding student loans. Nonetheless, the latest announcement comes amidst a period when Republicans are preoccupied with internal discord in the House of Representatives. Factional divides within the party led to the removal of Rep. Kevin McCarthy, R-Calif., from his role as Speaker of the House, resulting in legislative disarray.

Furthermore, the NAACP is urging Biden to broaden the scope of debt relief by incorporating Parent PLUS loans—financing options that parents utilize for their children’s higher education—into the SAVE Plan eligibility criteria.

“Education has traditionally served as a gateway for marginalized communities to ascend socially and amass generational wealth,” noted Derrick Johnson, President of the NAACP, in a statement highlighting the disproportionate debt burden carried by Black families. “It is morally indefensible that Black parents, in their endeavor to secure a brighter future for their children, become ensnared in a system that exploits their inherent disadvantages.”

Frequently Asked Questions (FAQs) about Federal Student Loan Forgiveness

What is the main goal of President Biden’s new announcement on student loans?

The primary objective of President Biden’s recent announcement is to alleviate the “unsustainable financial burden” of federal student loans for borrowers. The new initiative aims to erase $9 billion in educational debt for approximately 125,000 borrowers.

How many borrowers will benefit from this new initiative?

Approximately 125,000 borrowers are expected to benefit directly from this new round of federal student loan forgiveness, with $9 billion in debt slated for elimination.

What is the total amount of debt that has been forgiven since President Biden took office?

Since President Biden assumed office, federal student loan forgiveness programs have led to the cancellation of $127 billion in debt, benefiting a cumulative total of 3.6 million borrowers.

Will this move affect the economy?

While analysts from BNP Paribas estimate that the upcoming reactivation of loan repayments could remove $100 billion from consumer spending and potentially slow economic growth in the final quarter of the year, the move is not expected to have a significant long-term detrimental impact on the economy.

What is the SAVE Plan?

The SAVE Plan is a program introduced last year by the Biden administration that adjusts student loan repayment amounts in correlation with borrowers’ income levels. It is one of the several measures the administration is utilizing to chip away at student loan debt.

How have Republicans responded to Biden’s plan?

Republicans have generally opposed Biden’s measures on student debt relief. However, the announcement comes at a time when the Republican Party is experiencing internal divisions, including the ousting of Rep. Kevin McCarthy as Speaker of the House.

What is the stance of the NAACP on this issue?

The NAACP is advocating for the expansion of debt relief measures to include Parent PLUS loans, which are used by parents to finance their children’s higher education. The organization emphasizes the disproportionate impact of educational debt on Black families and communities.

What is the status of public service loan forgiveness?

Some of Biden’s efforts have been geared towards strengthening existing programs like the public service loan forgiveness, which aims to forgive the remaining balance on Direct Loans after the borrower has made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

More about Federal Student Loan Forgiveness

  • Federal Student Loan Forgiveness Programs
  • Biden’s Campaign Promises on Student Debt
  • BNP Paribas Economic Analysis on Student Loans
  • Public Service Loan Forgiveness Program
  • NAACP Statement on Student Loan Debt
  • SAVE Plan Overview
  • U.S. Department of Education Statement on Loan Forgiveness

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HenryT October 4, 2023 - 10:52 pm

Public service loan forgiveness getting a boost is a win. Maybe I’ll finally qualify.

AnnaS October 5, 2023 - 12:36 am

What’s the SAVE Plan? Never heard of it before. Need to look into that.

JennyQ October 5, 2023 - 2:17 am

The numbers are staggering, $127 billion since Biden took office? Thats a lot of debt.

CarlP October 5, 2023 - 4:20 am

Republicans are too busy infighting to actually contribute to the discussion, classic.

LindaM October 5, 2023 - 8:30 am

Not sure how this’ll affect the economy in the long run. The BNP analysis seems worrying.

RachelZ October 5, 2023 - 10:54 am

NAACP making a good point. Debt disproportionately affects minority communities. More should be done.

SarahW October 5, 2023 - 2:14 pm

Didn’t expect Biden to actually go through with it. Pleased but let’s see how it plays out in practice.

Mike J October 5, 2023 - 2:44 pm

Wow, this is huge. Finally, some relief for students, it’s about time.

Tom_R October 5, 2023 - 3:15 pm

While i’m happy to see some debt forgiveness, what about people who already paid their loans? Kinda unfair imo.

Steve-O October 5, 2023 - 6:54 pm

Gotta say, this does feel like a band-aid on a bigger issue. Education shouldn’t be this expensive to begin with.


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