Sunday 21 April 2024

Biden administration “forgives” another $7.4 billion in student debt for 277,000 borrowers, effectively transferring that debt to U.S. taxpayers

 The administration of President Joe Biden has announced another significant debt relief plan that supposedly cancels $7.4 billion of debt for 277,000 student loan holders.

According to a statement released by the White House, the cancellation is part of a broader effort by Biden to address the financial burdens of education, which he highlighted earlier in the month. This initiative is aimed at alleviating the economic pressures faced by millions of Americans and is seen as crucial for securing the support of young voters in the upcoming November re-election.  

Under Biden, the Department of Education has made it easier for some specific groups of borrowers, like public sector workers, to qualify for taxpayer-funded loan forgiveness.

This new repayment plan creates a shorter pathway to loan forgiveness for low-income borrowers. It is currently being challenged in at least two legal challenges led by Republican-led states.

In total, the Biden administration has authorized the cancellation of $153 billion in student loan debt for nearly 4.3 million people. That’s more than nine percent of all outstanding federal student loan debt.

As the November election approaches, the Biden administration has been eager to show prospective young voters how much student loan debt it has canceled, making new announcements about debt relief roughly once a month and sending emails directly to eligible borrowers. Earlier this week, Biden announced a new group of student debt relief proposals that could go into effect this fall. 

Biden’s student loan forgiveness efforts have been sharply criticized by many Republicans, who argue the president is transferring the cost to taxpayers who chose not to go to college or who already paid for it themselves. They also say he is circumventing the Supreme Court, which knocked down Biden’s signature student loan forgiveness program last year.

Republicans sue Biden's attempts to buy votes using taxpayer-funded student loan forgiveness

In the past few weeks, two groups of Republican-led states have sued the Biden administration over the income-driven repayment plan launched last year. Known as SAVE, or Saving on a Valuable Education, the plan offers the most generous terms for low-income borrowers. About $3.6 billion of the student debt relief will be delivered to people enrolled in the SAVE plan.

“Republicans in 18 states want to prevent their own constituents from benefiting from the SAVE plan. They want to end SAVE, make their constituents’ payments go up and keep them under mountains of loan debt with no end in sight,” said White House press secretary Karine Jean-Pierre.

Since SAVE launched last year, nearly eight million borrowers have enrolled and about 360,000 people have seen their remaining debt canceled due to the terms of the new plan.

Since Biden attempted to implement a sweeping student loan forgiveness program in 2022 – a plan that was knocked down by the Supreme Court before it delivered any kind of debt relief for loan holders – the White House has resorted to using the president's executive powers to provide piecemeal loan forgiveness programs.

Biden's sweeping plan back in 2022 would have transferred up to $20,000 of debt from borrowers earning less than $125,000 a year to regular taxpayers. This would have amounted to about $400 billion in transferred debt. The Supreme Court ruled that the administration overstepped its authority when it tried to do this.

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