President Joe Biden outlined a new round of federal student loan forgiveness on Wednesday to address the “unsustainable debt” that borrowers accumulate to complete their college education.
The announcement comes as borrowers brace for payments to restart after a three-year pause that began during the COVID-19 pandemic and Biden tries to fulfill his campaign promises on debt relief as he runs for reelection.
The Democratic president’s latest step will help 125,000 borrowers by erasing $9 billion in debt through existing programs. In total, 3.6 million borrowers will have had $127 billion in debt wiped out since Biden took office.
“We’re not done yet,” Biden said in the Roosevelt Room at the White House.
He pledged to help alleviate the burden of student debt while running for president, and he’s been under pressure to follow through even though his original plan was overturned by the conservative majority on the Supreme Court.
He has been relying on a patchwork of different programs to chip away at debt, such as the SAVE Plan announced last year, which lowers payments by tying them to borrowers’ income.
“My administration is doing everything we can to deliver student debt relief to as many as we can, as fast as we can,” Biden said.
“While a college degree is still the ticket toward a better life, that ticket has become excessively expensive. Americans who are saddled with unsustainable debt in exchange for a college degree has become the norm,” he said.
Some of Biden’s efforts have involved bolstering existing programs, like public service loan forgiveness.
“For years, millions of eligible borrowers were unable to access the student debt relief they qualified for, but that’s all changed thanks to President Biden and this administration’s relentless efforts to fix the broken student loan system,” Education Secretary Miguel Cardona said in a statement.
Additional debt forgiveness could help alleviate the impact of the long-scheduled resumption of loan payments this month, which will put a dent in tens of millions of family budgets. But it is unlikely to undermine the economy’s strength in the long term even though analysts at BNP Paribas estimated it could take $100 billion out of consumers’ pockets and slow overall growth during the final three months of this year.
Republicans have fought Biden’s plans on student debt, but Wednesday’s announcement comes as they’re consumed by infighting on Capitol Hill. Hard-right Republicans forced a vote that ousted Rep. Kevin McCarthy, R-Calif., as House speaker, leaving the chamber in chaos.
In addition, the NAACP is pushing Biden to expand debt forgiveness by allowing Parent PLUS loans, which parents use for their children’s college education, to be eligible for the SAVE Plan.
“Historically, education has been viewed as an entry point for marginalized communities to achieve upward mobility and begin building generational wealth,” NAACP President Derrick Johnson said in a statement that emphasized the disproportionate impact of debt on Black families. “It is unconscionable that, in their quest to provide their children with a brighter future, Black parents have fallen victim to a system that preys on their inherent disadvantage.”
