The decision was made only three days after student loan payments restarted following a three-year break.
On Wednesday, President Biden stated that due to excessive bureaucratic processes, only 7,000 individuals in the Public Service Loan Forgiveness program have received the relief they qualify for.
On Wednesday, President Biden announced the cancellation of an extra $9 billion in student debt. This decision came as student loan repayments resumed this month after a three-year break.
he decision impacts 125,000 individuals who are eligible under current programs. This includes public-service employees like teachers and firefighters, as well as those receiving permanent disability benefits, as stated in a White House announcement.
Mr. Biden’s recent announcement comes as he seeks alternative solutions to provide debt relief following the Supreme Court’s rejection of his larger proposal earlier in the summer. The original plan aimed to eliminate over $400 billion in student debt for approximately 43 million borrowers.
In the initial proposal, individuals earning less than $125,000 (or couples earning less than $250,000) would have been eligible for up to $20,000 in relief if they had received a Pell Grant, and $10,000 if they had not.
The Supreme Court ruled that President Biden’s loan plan went beyond his authority, rejecting a significant part of his prominent policy agenda and a crucial commitment to voters as the 2024 campaign gains momentum.
President Biden strongly criticized the court’s decision made in June.
“The funds were on the verge of being distributed, but Republican elected officials and special interests filed lawsuits against us,” he stated. “The Supreme Court supported them, taking away from millions of Americans the chance to receive thousands of dollars in student debt relief that could have transformed their lives.”
In September, interest started accruing on unpaid student loans once more. Several economists are worried that this could have a significant negative impact on the economy just when it’s trying to recover, especially with concerns about a possible recession looming.
By providing an extra $9 billion, the administration has been able to offer relief totaling $127 billion to nearly 3.6 million Americans.
The money results from “improvements” made by the Education Department to various debt relief programs, such as the Public Service Loan Forgiveness program.
Over $5 billion will be allocated to aid 53,000 employees employed in federal, state, local governments, and eligible organizations. President Biden stated that due to bureaucratic obstacles, only 7,000 individuals in the Public Service Loan Forgiveness program had received the relief they were entitled to in almost 15 years.
An additional $2.8 billion was allocated to approximately 51,000 individuals who have been repaying their undergraduate loans for over two decades but did not receive full forgiveness due to errors in counting qualifying payments. The Education Department rectified past inaccuracies in the calculation of eligible payments for these borrowers.
Last month, the government provided $37 million in aid to assist over 1,200 students who incurred debt while attending the University of Phoenix. The Federal Trade Commission found that the university had deceived students with false advertisements and promises of lucrative employment.
In August, the government initiated the enrollment process for a fresh income-based program called SAVE. This program enables approximately 30 million borrowers with federal undergraduate or graduate loans to adjust their monthly payments based on their income and family size.