Biden cancels $1.2 billion in student debt six months ahead of schedule

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The White House on Wednesday announced that President Biden has canceled another $1.2 billion in student loan debt for more than 150,000 borrowers earlier than expected.

In an executive action that was originally planned for July, Biden has activated a Savings on Valuable Education (SAVE) plan policy that cancels debt for enrolled borrowers who have been in repayment for at least 10 years and hold $12,000 or less in student loan debt. Those with larger debts will receive relief after an additional year of payments for every additional $1,000 they borrowed. 

“This shortened time to forgiveness will particularly help community college and other borrowers with smaller loans and put many on track to being free of student debt faster than ever before,” the White House said in a statement. “Under the Biden-Harris Administration’s SAVE plan, 85 percent of future community college borrowers will be debt free within 10 years.” 

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Biden has now unilaterally wiped away nearly $138 billion in federal student loans for almost 3.9 million borrowers without a single act of Congress. The student loan bailouts come after the U.S. Supreme Court blocked Biden’s initial debt cancelation plan last year, which would have cost more than $400 billion. 

“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,” the White House said. 

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A graph titled, "Debt Forgiveness Embedded in SAVE"

The nearly 153,000 borrowers who have qualified for Biden’s latest handout will receive an email from the president starting this week informing them of their relief, according to the White House. Next week, the U.S. Department of Education will begin to contact borrowers who are not enrolled in the SAVE plan but who are eligible for relief to encourage them to sign up. 

Wednesday’s announcement follows several actions taken by Biden to keep his campaign promises to student loan borrowers — and rally progressive supporters ahead of the next election. 

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Supreme Court on student loan handouts

The Biden administration has previously approved $56.7 billion in debt cancelation for more than 793,000 borrowers through the Public Service Loan Forgiveness (PSLF) program; $45.6 billion for 930,500 borrowers through improvements to income-driven repayment; $11.7 billion for 513,000 borrowers with a total and permanent disability; and $22.5 billion for 1.3 million borrowers through closed school discharges, borrower defense and related court settlements.

“With today’s announcement, we are once again sending a clear message to borrowers who had low balances: if you’ve been paying for a decade, you’ve done your part, and you deserve relief,” said Secretary of Education Miguel Cardona. “Under President Biden’s leadership, our Administration has now approved loan forgiveness for nearly 3.9 million borrowers, and our historic fight to cancel student debt isn’t over yet.”

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According to the Penn Wharton budget model, President Biden’s SAVE plan will incur a net cost of $475 billion over the 10-year budget window.

Republicans have panned Biden’s student debt handouts, arguing that taxpayers will ultimately foot the bill for the president’s contributions to the $34 trillion national debt

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