The U.S. Department of Education (DOE) announced the cancellation of $9 billion in student debts amid strong Republican opposition to the Biden administration’s “reckless” debt cancellation plans.
The $9 billion forgiveness will wipe out loans of an additional 125,000 Americans, according to an Oct. 4 press release by the DOE. This would take the total approved debt cancellation by the Biden administration to $127 billion for nearly 3.6 million Americans. “For years, millions of eligible borrowers were unable to access the student debt relief they qualified for, but that’s all changed thanks to President Biden and this Administration’s relentless efforts to fix the broken student loan system,” said U.S. Secretary of Education Miguel Cardona.
Out of the $9 billion, $5.2 billion will be forgiven for 53,000 borrowers under the Public Service Loan Forgiveness (PSLF) program, which is applicable to government and nonprofit workers.
$2.8 billion will be forgiven for almost 51,000 borrowers under the Income-Driven Repayment (IDR) plans, and $1.2 billion in forgiveness will be granted to almost 22,000 borrowers who have a total or permanent disability.
To date, the Biden administration has forgiven $51 billion in student debt under PSLF and $42 billion in loans under the IDR plans, per the DOE.
President Biden has come under criticism for pushing student debt cancellation programs, with Republicans making efforts to counter such schemes.
Last month, a group of Republican lawmakers led by Senator Bill Cassidy (R-La.) introduced the Congressional Review Act (CRA) resolution aimed at overturning the Biden administration’s “reckless” IDR plan.
The IDR plan will “result in a majority of bachelor’s degree student loan borrowers not having to pay back even the principal on their loans, costing taxpayers as much as $559 billion,” according to a Sept. 5 press release.
The plan will forgive loan balances after 10 years of payments, instead of 20 years in case of borrowers who have loan balances of $12,000 or lower. There are also no “guardrails” to prevent households making over $250,000 a year from collecting such assistance if family members file taxes separately, it said.
An individual would need an income above $32,805 and a family of four would need to have a total income over $67,500 in 2023 (roughly equal to the median income of all households in the United States) before they are expected to pay anything under the IDR plan.
“President Biden continues to propose budget-busting student loan bailouts that would force 87 percent of Americans who do not have student loan debt to bear the costs of the 13 percent of Americans who do,” said Senator John Thune (R-S.D.).
“It’s incredibly unfair to those who never incurred student debt because they didn’t attend college in the first place or because they either worked their way through school or their family pinched pennies and planned for higher education.”
The Biden administration’s student debt cancellation spree comes as the Supreme Court struck down a mass student debt forgiveness plan in June that would have wiped out as much as $20,000 in debt for around 40 million borrowers—costing the government $800 billion or more in the process.
Following the decision, the Biden administration announced that the secretary of education was looking to create “an alternative path to debt relief” for borrowers of student loans
Negative Economic Effects
Late last month, the Biden DOE announced its “initial set of policy considerations” for a new plan to provide debt relief. However, unlike previously when the Biden administration had proposed universal debt relief, the new policy focuses on offering debt forgiveness for student loan borrowers who are “in need.”
The policy has identified groups of people as potential beneficiaries of the new debt relief plan—borrowers with balances greater than what they originally borrowed; whose loans first entered repayment decades ago; who attended programs that did not provide sufficient financial value; and those who are eligible for relief under programs like IDR but have not applied.
The relief will also be applicable to borrowers who have experienced financial hardship and need support but do not receive such support from the current student loan system.
These policy considerations will be discussed in the first Student Loan Relief Committee meeting that is scheduled to take place on Oct. 10 and 11.
The Biden administration’s move away from universal student debt relief has irked groups that were expecting the president to deliver on his campaign promise. In 2020, Biden said that he would seek to forgive $10,000 per student loan borrower.
“Biden Administration announces initial set of policy considerations, focusing on ‘student loan borrowers in need’. THIS is why we keep fighting to amplify borrower stories and needs!” advocacy group Student Debt Crisis Center (SDCC) said in an Oct. 2 post on X.
Some experts are concerned about negative consequences for the economy arising from President Biden’s student debt cancellation programs.
“We have a student loan system that assumes that people are going to pay their debt back, and instead, it’s just this massive government spending policy that has negative effects for everybody,” Caleb Kruckenberg, an attorney at Pacific Legal Foundation, said in a July interview with The Epoch Times.
This will not only harm taxpayers at a time of high inflation but also worsen tuition inflation by sending a message that colleges can continue raising their fees, he said.
“Because every college knows that if there’s more funding, more free money, the best way to take advantage of that is to raise tuition for everybody.”
From The Epoch Times
