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Student Loan Forgiveness: President Biden Nullified Further Student Loan Debt Of $9 Billion

US
Source- Forbes

In anticipation of the three-year break in student loan repayments, the Biden administration recently stated the cancellation of $9 billion in debt for 125,000 borrowers. The administration’s plan for widespread student loan forgiveness, which could have helped over 40 million students and erased up to $20,000 in debt for each of them, was declared unlawful by the Supreme Court in June. This action is in response to that decision.

Student Loan Forgiveness

Student Loan Forgiveness; Source- CBS News

To Lower Student Loans

The government has sought various ways to reduce student debt since the larger forgiveness plan was rejected, including developing a new IDR scheme and offering outright forgiveness to qualified borrowers. However, as millions of borrowers with student loans begin making payments again, problems have emerged with loan servicers, ranging from lengthy wait times to useless customer service agents. Public employees, IDR participants, and disabled borrowers are the three groups of borrowers who are targeted for debt reduction.

53,000 Student Loans To Be Forgiven

After making 120 qualifying monthly payments, participants in the PSLF programs which are open to employees of governmental and nonprofit organizations will be forgiven approximately loans for a total of $5.2 billion. With $2.8 billion in debt, approximately 51,000 IDR plan participants will receive relief. This was done in response to differences in payment tracking. Moreover, 22,000 borrowers with a combined debt of $1.2 billion who were located using the SSA data will have their loans forgiven as a result of total or permanent impairment.

IDR participants receiving pardons have already received notices. A more comprehensive proposal for student loan relief under the Higher Education Act is also being developed by the Biden administration, though it may meet legal obstacles and take at least a year to complete. To solve the problems with the student loan system, the U.S. Secretary of Education Miguel Cardona noted that the administration has granted $127 billion in debt relief for roughly 3.6 million students, including this most recent round of forgiveness.

New Income Driven SAVE Program

The government gave $37 million last month to compensate over 1,200 students who took on loans to attend classes at the University of Phoenix, that the Federal Trade Commission claimed deceived students with deceptive advertisements and promises of well-paying jobs. Nearly 30 million students with federal bachelor or graduate loans were able to revise their monthly payments in August thanks to the administration’s new income-driven SAVE program, which allowed for the consideration of family size and income.

The Biden administration introduced the SAVE plan in response to the Supreme Court’s decision earlier this year. The SAVE plan will fully take effect in July and raise the income exception between 150% and 225% of the poverty level. Additionally, it aims to cut in half undergraduate loan installments and guarantee that, as long as borrowers make their minimum payments, their balances won’t increase.

 

 

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