President Joe Biden has taken significant steps toward expanding the federal student loan program’s capacity to forgive student debt. Despite potential legal challenges that could threaten his most ambitious plan, Biden has made it easier for borrowers to qualify for loan forgiveness.
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Some of the key measures taken by his administration include:
Higher Education Emergency Relief Fund
More than 18 million college students have benefited from the Higher Education Emergency Relief Fund, which was created by the Biden administration to provide financial aid to students amid the pandemic. In 2021 alone, $19.5 billion in emergency grants were distributed to students.
Relief on Defaulted Student Loans
In August of 2022, the White House announced a program to clear the debt of over 7 million borrowers who had defaulted on their student loans. This move has brought relief to borrowers who were facing severe consequences such as the seizure of tax refunds and Social Security checks, and long-lasting impacts on credit.
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New Income-Driven Repayment Plan
The new IDR plan changes the way payments are calculated and how much income is counted. This is expected to reduce monthly payments for most borrowers who enroll by half or more.
Revised Student Loan Forgiveness
The Department of Education has revised existing loan forgiveness programs and has already canceled roughly $38 billion in loans for 1.75 million borrowers. A one-time review of all past federal student loan payments has also been implemented, which broadens the number of payments that can count toward income-driven repayment if borrowers choose to enroll.
Forbearance
The White House has extended the broad, zero-interest pause on loan payments that were initiated under the previous administration. Federal student loan payments will resume as late as summer 2023 according to Nerd Wallet, once legal challenges surrounding debt cancellation have been resolved.
President Biden has taken significant measures to help ease the burden of student debt on millions of borrowers. These efforts, although faced with potential legal challenges, have the potential to provide relief to millions of Americans struggling with student loan debt.
READ ALSO: What Borrowers Need to Know About Biden’s Proposed Student Loan Repayment Plan
