President Joe Biden’s administration is set to forgive another $1.2 billion worth of student-loan debt for nearly 153,000 people.
The White House announced Wednesday its latest debt-forgiveness plan will benefit people enrolled in the Saving on a Valuable Education (SAVE) repayment program for borrowers who have been repaying student debt for at least ten years and took out $12,000 or less in student debt.
“This shortened time to forgiveness will particularly help community college and other borrowers with smaller loans and put many on track to being free of student debt faster than ever before,” the White House said.
The SAVE plan is an initiative launched by the White House in August to expand income-based student debt repayment options at an estimated cost of $475 billion over ten years, according to the budget model created by the University of Pennsylvania’s Wharton School. Under the SAVE plan, borrowers are provided student-loan forgiveness after ten years worth of payments and their student loan balances cannot increase due to unpaid interest payments.
President Biden has used more than two dozen executive actions to wipe out $138 billion of student-loan debt for about 3.9 million borrowers over the course of his term, the White House said. The Biden Education Department is seeking to forgive student-loan debt for struggling borrowers.
The Supreme Court struck down in June President Biden’s executive order to erase up to $20,000 of student-loan debt for borrowers making under $120,000 per year. The HEROES Act was used by the Biden administration to defend its ability to unilaterally forgive student loans for millions of Americans.
Chief Justice John Roberts wrote for the majority “our precedent— old and new—requires that Congress speak clearly before a Department Secretary can unilaterally alter large sections of the American economy.”
Biden announced a plan to circumvent the Supreme Court’s ruling shortly after it occurred by canceling student debt through alternative means. His new student-debt scheme will be based on the Higher Education Act rather than the HEROES Act.
“I think the Court misinterpreted the Constitution,” Biden asserted. “We’ll use every tool at our disposal to get you the student debt relief you need and reach your dreams.”
Federal student-loan payments resumed in October after a years-long pause that began during the Covid-19 pandemic. A provision in the bipartisan debt-ceiling deal passed in June prevented the Biden administration from continuing to extend the suspension of student-loan payments.