(LibertyInsider.org) – The Biden administration has announced yet another expansion of student loan forgiveness just two short months after it approved $5 billion in relief and significantly expanded the Saving on a Valuable Education (SAVE) Plan. The new plan, announced on February 21, will reportedly cancel an additional $1.2 billion dollars in debt.
The recent update specifically focuses on students in the SAVE program. To be eligible, borrowers must have been in repayment for a minimum of 10 years and have borrowed no more than $12,000 for their education.
Those who took out more than $12,000, not including accumulated interest costs, aren’t immediately eligible for dismissal. They can earn it by making payments for one more year.
Biden administration to cancel another $1.2B of student loans https://t.co/eK4eFSEIIQ pic.twitter.com/egZoF4k1tD
— New York Post (@nypost) February 21, 2024
It is important to note that, under the SAVE program, all borrowers technically have the right to request cancellation after a repayment period of no fewer than 20 years based on need. That timeline extends to 25 years for graduate students. Debtors are asked to make monthly payments of at least 10% of their income under the scheme, but the Biden administration reportedly plans to reduce this to 5% in July of 2024.
According to a White House fact sheet, over 7 million students and graduates are currently enrolled for relief under the SAVE program. At least 4 million of those borrowers pay $0 per month on the income-driven payment plan.
US Secretary of Education Miguel Cardona lauded the change. “If you’ve been paying for a decade,” he said, “you’ve done your part, and you deserve relief.”
President Joe Biden also celebrated the expansion of forgiveness on X, formerly known as Twitter. Pointing out how many people the change would affect, he vowed to keep “pushing to relieve more.”
But while many see the new changes as a net win, not everyone is so confident that canceling so much student debt is a wise path forward. Critics argue that broad forgiveness is financially irresponsible and unfair to those who have already repaid their loans or chose not to take on debt in the first place.
In June 2023, the House Budget Committee issued a report warning taxpayers about the hidden financial costs of what it called “student loan bailouts.” Citing data from the National Taxpayers Union Foundation (NTUF), they estimated that President Biden’s proposed schemes would end up costing the taxpayer a minimum of $3,500.
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