The White House issued the statement on Friday, marking another step in the administration's ongoing efforts to alleviate the burden of student loans.
The announcement comes in the wake of the Supreme Court's June 30 ruling in Biden v. Nebraska, which deemed the administration's plan to cancel up to $10,000 in student debt for all borrowers as unlawful. In response, the administration has sought alternative routes for debt cancellation, most notably through the Saving on a Valuable Education (SAVE) plan. This plan, finalized by the Department of Education (DOE) on the day of the court's ruling, is set to cancel the balances of borrowers enrolled in the SAVE plan who borrowed less than $12,000 in debt and have been in repayment for at least ten years by February.
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President Biden stated, "This action will particularly help community college borrowers, low-income borrowers, and those struggling to repay their loans. 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."
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The SAVE plan caps student loan repayments at 5% of discretionary income every month for undergraduate borrowers. According to the White House's press release, "Already, 6.9 million borrowers are enrolled in the plan, and 3.9 million have a $0 monthly payment."
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However, the plan has not been without its detractors. Conservative groups have criticized student loan forgiveness programs as redistributionist, arguing that college-educated borrowers, a significant Democratic-voting block, are being relieved of repaying loans funded by taxpayers, including individuals without a college education. The SAVE plan was promptly challenged in court by a coalition of conservative and libertarian groups, with the case currently pending at the U.S. District Court for the Eastern District of Michigan.
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Since President Biden took office on January 20, 2021, over 3.6 million borrowers have received some form of debt forgiveness, amounting to $132 billion, as per the White House.
In addition to debt cancellation, the administration has sought regulatory changes to allow individuals with student debt to access government services, such as affordable housing.
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Housing and Urban Development Secretary Marcia Fudge, now known as X, stated on Twitter, "We know debt disproportionately impacts Black and Brown people in this country. That is why we introduced changes to how potential homebuyers’ rental history is considered, and how their student loan debt is calculated so more people can qualify for affordable housing financing."
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Student debt repayments, suspended during the COVID-19 pandemic, resumed in October of 2023, with 8.8 million borrowers missing their first payment.
Democratic Rep. Melanie Stansbury of New Mexico responded to Biden's announcement on Twitter, stating, "This is a great step. Next: let’s cancel all student debt." Senate Majority Leader Chuck Schumer and Democratic Sen. Elizabeth Warren of Massachusetts also applauded the decision on Twitter.
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