On August 24, 2023, President Biden announced $7.4 billion in student loan debt relief for Public Service Loan Forgiveness (PSLF) program borrowers and those enrolled in income-driven repayment (IDR) plans. This move comes as part of the Biden administration's ongoing efforts to address the growing burden of student loan debt in the United States.
The announcement provides much-needed relief to millions of borrowers who have struggled to repay their student loans. In total, the Biden administration has cancelled $153 billion in student loan debt for 4.3 million borrowers.
The IDR program is designed to help borrowers who are struggling to repay their loans by capping their monthly payments to a percentage of their discretionary income. Under the new IDR relief plan, the Department of Education will automatically adjust the income-driven repayment plans of millions of borrowers. This will result in an estimated $1 billion in immediate debt relief for approximately 3.6 million borrowers.
The Department of Education will also count all past payments of federal student loans, including those from defaulted loans, toward loan forgiveness under IDR plans. This change is expected to significantly reduce the amount of time it takes for borrowers to qualify for loan forgiveness under IDR plans.
The PSLF program forgives the remaining federal student loan debt of borrowers who have made 120 qualifying monthly payments while working full-time for a public service employer. However, the PSLF program has been plagued by problems, with many borrowers finding it difficult to qualify for loan forgiveness.
Under the new PSLF relief plan, the Department of Education will make it easier for borrowers to qualify for loan forgiveness under the PSLF program. The Department will review millions of PSLF applications that were previously denied and will discharge the debt of any borrower who has made at least 10 qualifying payments.
The Department of Education will also streamline the PSLF application process and will provide more resources to help borrowers track their progress toward loan forgiveness.
In addition to the $7.4 billion in student loan debt relief announced on August 24, the Biden administration has taken a number of other steps to address the growing burden of student loan debt. These steps include:
The steps taken by the Biden administration are a welcome relief for millions of student loan borrowers. However, more needs to be done to address the root causes of the student loan debt crisis. The high cost of college tuition and the rising cost of living have made it increasingly difficult for borrowers to repay their student loans.
The Biden administration has called on Congress to take action to make college more affordable and to make it easier for borrowers to repay their student loans. It remains to be seen whether Congress will take action on these issues.
