Biden cancels another $1.2bn in student debt

More than 150,000 Americans will have their federal student debts worth approximately $1.2bn forgiven thanks to a new move by the Biden administration.

Individuals whose debts have been forgiven should have received an email informing them on Wednesday, according to the White House.

“From day one of my Administration, I vowed to fix student loan programs so higher education can be a ticket to the middle class—not a barrier to opportunity,” Joe Biden said in a statement.

In total, the Biden administration has forgiven approximately $138bn in student debt, accounting for nearly 3.9 million borrowers.

On Wednesday, Mr Biden praised the plan, noting that debt relief paves the way for Americans to start businesses and buy homes, calling his SAVE plan the “most affordable repayment plan ever.”

He said 7.5 million Americans have already enrolled in the plan.

“This is the kind of relief that can be life-changing for individuals,” Mr Biden said during a press conference.

Both waves of debt forgiveness have been the result of executive actions enacted by the president.

A White House message announcing the debt cancellation also included an indictment of Republicans in Congress who have worked to thwart the debt relief.

"While Republicans in Congress and their allies try to block President Biden every step of the way, the Biden-Harris Administration continues to cancel student debt for millions of borrowers, and is leaving no stone unturned in the fight to give more borrowers breathing room on their student loans," the White House said in its statement.

Republicans attempted to block the SAVE plan in Congress, but a 49-50 vote defeated their attempts to stop the loan forgiveness program.

The majority of the debts forgiven have been through programs put in place before Mr Biden's time in office for specific types of borrowers, like public workers who have been making payments for at least 20 years.

Mr Biden attempted to push through a student loan forgiveness plan in 2022, but the program faced a legal challenge that ultimately ended with the conservative-majority Supreme Court ruling against the debt forgiveness.

Only individuals who enrolled in the SAVE program — which was enacted as pandemic-era loan pauses came to an end — who borrowed $12,000 or less, and who made payments for at least 10 years were eligible for the forgiveness.

The White House said the current SAVE program and associated forgiveness plan will help borrowers who took out smaller loans to achieve higher education.

"Under the Biden-Harris Administration’s SAVE plan, 85 per cent of future community college borrowers will be debt-free within 10 years," the White House said in a statement. "The Department will continue to regularly identify and discharge other borrowers eligible for relief under this provision on SAVE."

Like other repayment plans, the SAVE plan adjusts monthly payments based on borrowers' current incomes. More than four million borrowers enrolled in the SAVE plan have $0 monthly payments as a result.