On January 19th, 2024, the Biden Administration announced nearly $5 billion in student debt relief, cancelling the debt of approximately 74,000 borrowers. This development is the latest installment in the Administration's campaign to lower student loan debt and make higher education more affordable.
This most recent round of cancellation came through a review of borrowers in existing loan repayment programs, including the federal Public Service Loan Forgiveness program, who had met threshold repayment requirements but did not yet receive promised forgiveness.
In addition, President Biden shared that he aims to "fast-track" the implementation of the Administration's Saving on a Valuable Education (SAVE) Plan, a 2023 initiative that modified an existing student loan repayment option to make the terms more generous to borrowers. The Administration had developed the SAVE Plan after the Supreme Court struck down an earlier plan to broadly forgive up to $20,000 of borrowers’ loans. The SAVE Plan is income-driven, meaning that borrowers' income and family size determine eligibility, as opposed to the remaining balance on the loan repayment.
One of the SAVE Plan’s most prominent features is its accelerated timelines for loan cancellation for borrowers based on the amount they borrowed. For example, people who borrowed under $12,000 could have all of their debt cancelled within 10 years. This new development regarding the SAVE Plan is particularly beneficial for community college students and alumni, as two-year institutions’ relatively lower tuitions often prompt a smaller loan balance. Tuition-free community college was a major component of Biden’s educational platform as a 2020 presidential candidate, and while free two-year degrees have not yet passed Congress, the Administration continues to work towards that goal with policies like expanded Pell Grant eligibility and greater funding for community colleges.
Proponents of this latest round of student debt cancellation praise the Administration for providing needy students and families with financial relief they consider long overdue, while critics of the policy, like House Committee on Education and the Workforce Chairwoman Rep. Virginia Foxx (R-NC) argue that it will be too burdensome for other taxpayers.
Student debt relief remains a key issue for the ABA, taking center stage in previous ABA Days and inspiring a Student Debt Week of Action in 2021. Follow us on social media platforms @ABAGrassroots to learn more about significant developments as they happen.