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By Omar Mohammed
Reporter, Economy & Finance
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The Biden administration said on Wednesday it has approved close to $5 billion worth of student loan forgiveness for tens of thousands of borrowers, the U.S. Department of Education (DOE) said in a statement.
The latest relief is a result of "fixes" made by officials on income-driven repayment (IDR) forgiveness and public service loan forgiveness plans (PSLF) The loan discharges will impact more than 80,000 borrowers, the DOE said.
The department said that $2.2 billion will serve 46,000 people through the fixes it made through the IDR.
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"That will provide borrowers with an accurate count of progress toward forgiveness and address longstanding concerns with misuse of forbearance," the DOE said.
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Another $2.6 billion worth of relief will to borrowers through the PSLF initiative.
"This includes borrowers who have benefited through the limited PSLF waiver and ongoing regulatory improvements to the programs," the DOE added.
"This relief is thanks to my Administration's efforts to fix Public Service Loan Forgiveness, so teachers, members of the military, nurses, and other public service workers get the relief they have earned," President Joe Biden said in a statement on Wednesday.
"It's because of actions my Administration took to make sure that borrowers who have been in repayment for at least 20 years - but didn't accurately get credit for student loan payments - get the relief they are entitled to," he added.
The latest move to forgive student debt brings the Biden administration's total debt cancellation to borrowers to $132 billion for over 3.6 million Americans, the White House said.
Student loan repayments resumed in September beginning with the interest on debt while the actual debt reimbursements restarted in October following a pause during the COVID-19 outbreak as the government was trying to provide support due to the pandemic-induced economic crisis.
Read more: Student Loan Forgiveness Updates and FAQs: Who Qualifies and How To Apply
Analysts say that on average Americans spend about $200 to $300 a month on student debt repayments, which is around 5 percent of the U.S. median salary.
About 44 million Americans owe student debt. As of November 2023, student debt stood at $1.6 trillion, an increase of $30 billion in the third quarter of this, according to data from The Federal Reserve Bank of New York released last month.
The Biden administration tried to forgive up to $20,000 of student debt but that effort was struck down by the U.S. Supreme Court in the summer. In response, the government proposed the SAVE plan, which was aimed at creating path for borrowers to wards debt forgiveness quicker.
Meanwhile, the administration has also created a committee of independent experts to find ways to provide financial relief to student borrowers.
"In the wake of the Supreme Court's decision on our student debt relief plan, we are continuing to pursue an alternative path to deliver student debt relief to as many borrowers as possible as quickly as possible," Biden reiterated in his statement on Wednesday.
Update 12/6/23, 4 p.m. ET: This article was updated with additional information.
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