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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowPresident Joe Biden said Wednesday that while a college degree was still a ticket to a better life, that ticket is often too expensive, as he announced he was canceling federal student loans for nearly 153,000 borrowers.
Biden, who is in the midst of a three-day campaign swing through California, made the announcement as part of a new repayment plan that offers a faster path to forgiveness, putting the spotlight on his debt cancellation efforts as he ramps up his reelection campaign.
“Too many Americans are still saddled with unsustainable debt in exchange for a college degree,” he said from a local library, before he went on to campaign-related events. Loan relief helps the greater economy, he reasoned, because “when people have a student debt relief, they buy homes. They start businesses, they contribute. They engage.”
The administration began sending email notifications on Wednesday to some of the borrowers who will benefit from what the White House has called the SAVE, or Saving on a Valuable Education, program. The cancellations were originally scheduled to start in July, but last month the administration said it would be ready almost six months ahead of schedule, in February.
“Starting today, the first round of folks who are enrolled in our SAVE student loan repayment plan who have paid their loans for 10 years and borrowed $12,000 or less will have their debt cancelled,” Biden posted on social media Wednesday. “That’s 150,000 Americans and counting. And we’re pushing to relieve more.”
The first round of forgiveness from the SAVE plan will clear $1.2 billion in loans. The borrowers will get emails with a message from Biden notifying them that “all or a portion of your federal student loans will be forgiven because you qualify for early loan forgiveness under my Administration’s SAVE Plan.”
In his email to borrowers, Biden wrote he heard from “countless people who have told me that relieving the burden of their student loan debt will allow them to support themselves and their families, buy their first home, start a small business, and move forward with life plans they’ve put on hold.”
More than 7.5 million people have enrolled in the new repayment plan.
He said Wednesday it was the kind of relief “that can be life-changing for individuals and their families.”
“I’m proud to have been able to give borrowers like so many of you the relief you earned,” he said, asking the crowd gathered for his speech how many had debt forgiven. Many raised their hands.
During a quick stop at CJ’s Cafe before his library talk, Biden greeted customers, offering handshakes and hugs and posing for selfies. After his speech, Biden headed to San Francisco, where he was greeted by former House Speaker Nancy Pelosi and headed to a fundraiser at a private home, where he spoke of his efforts to combat climate change to a roomful of donors.
Biden announced the new loan repayment plan last year alongside a separate plan to cancel up to $20,000 in loans for millions of Americans. The Supreme Court struck down his plan for widespread forgiveness, but the repayment plan has so far escaped that level of legal scrutiny. Unlike his proposal for mass cancellation—which had never been done before—the repayment plan is a twist on existing income-based plans created by Congress more than a decade ago.
Biden said he remained steadfast in his commitment to “fix our broken student loan system,” working around the court’s ruling to find other ways to get it done.
Borrowers are eligible for cancellation if they are enrolled in the SAVE plan, originally borrowed $12,000 or less to attend college and have made at least 10 years of payments. Those who took out more than $12,000 will be eligible for cancellation but on a longer timeline. For each $1,000 borrowed beyond $12,000, it adds an additional year of payments on top of 10 years.
The maximum repayment period is capped at 20 years for those with only undergraduate loans and 25 years for those with any graduate school loans.
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Joe has declared himself above Supreme Court rulings. Isn’t that what dictators do?
I take it you did not understand the supreme court ruling…
The SCOTUS ruling reaffirms what Nancy Pelosi herself already indicated a long time ago: sweeping budgetary decisions are the domain of the legislative branch, not the executive.
Dominic is correct. How Senile Joe plans to implement this policy is unclear. Can the Dept of Ed defy congress AND the Supreme Court?
Each time someone’s debt is forgiven, the government should cut loans to that school that provided the education that led to non-payment of debt. The situation would resolve itself pretty quickly. (And, I am not aware of anything that prevents the feds from capping loans to institutions whose students don’t pay their debts.)
I like that approach Patrick!
“borrowed less that $12K and have made payments for 10 years”? wouldn’t the loan be pretty much paid off or is my math incorrect?
Most of these loans are 15% APR and likely they now owe more than when they graduated.
My SO has paid $190k in loan payments in the last decade and the balance has gone up.
This guy just refuses to quit. These people signed a note that said they will repay the debt. They need to repay the debt.
It is the fault of everyone over the age of 50 who convinced my generation we had to go to college and get into debt to be successful. They screwed up the economy so bad under clinton and bush that no one can pay them back.
Most of these problems will resolve when the last baby boomer is laid to rest
And how many of them are the folks buying up all the starter homes to turn today’s grads into permanent renters?
History might not repeat but it sure seems to rhyme.
Ah yes, the “blame the Boomers”. I’m just young enough to fall reasonably shy of Boomer-land, but to pretend that Boomers singlehandedly made college unaffordable is a gross simplification.
Congress began astronomically increasingly the loan packages for higher ed during the Reagan and Bush Sr years. And the universities, rather than actually using that most of that money to help make tuition affordable to a greater array of the population, used it initially on plush vanity construction; dorms, athletic centers, and lecture halls became ridiculously nice in the late 1990s. And then, by the 2000s, they spent it on an even stupider endeavor: more administrators, mostly diversity deanlets. By the 2010s, non-tenured lecturers are barely operating above food-stamp wages, and the HR departments are flooded with Karens averaging $85K salaries. And tuitions still went up by significant margins, year after year. Gotta hire more bureaucrats.
I’ll concede that many of the decision makers during this time period were indeed Boomers, either the Congressional grifters who authorized all the funding with few constraints on how it could be used, or the ones in academic leadership spending the funding on fluff. But that neglects the fact that Boomers are a rapidly shrinking contingent in academia (many are retiring) and yet the problems of affordability are worse than ever. And precious few Boomers actually made these wasteful decisions to the detriment of everyone else. The ones who went to college from 1970 to 1985–who could pay tuition in full with their summer jobs–did nothing wrong to bring about this disaster…except of course for the handful who became university Presidents and Trustees.
Thankfully the great correction is happening as we speak: more and more unnecessary, tiny, regional liberal arts colleges are collapsing, and now even the ones with prestige and high endowments are facing the pinch. The defunct Mills College wasn’t some fly-by-night school. And what are they doing to stay in the black? They aren’t cutting all that administrative bloat; they’re getting rid of anthropology, art history, music, German, physics.
By the way, the leading article at Inside Higher Ed (which judiciously tracks the floundering financials of academia), right now as I type: “MORE THAN HALF OF RECENT 4-YEAR COLLEGE GRADS ARE UNDEREMPLOYED” (i.e., they have to settle for jobs that don’t require a degree).
And yet, somehow, we should be wishing that the death of Boomers will somehow fix this.
JJ Frankie,
If you can’t figure out how to pay off $12,000 in 10 years or less, you probably shouldn’t have gone to college in the first place because clearly your intellect is not very marketable.
Lauren…. learn to read. I did not say they raised the prices I said they forced multiple generations of us to go to college without understanding the basic concepts of ROI
Boomers forced college on their kids because they did not want competition in the blue collar space and wanted us to take on crushing debt on a false promise that we would all make 6 figures, and yet the average college student leaves with crushing debt and making $45k…
Glen – If I’m paying as much in taxes as I currently am and we still charge money for education…. We’re definitely no longer a super power
I love the angst. I paid my own way through college as well as my children’s. We will receive no benefit from these debt reduction programs. So what? I don’t subscribe to hating things that help others besides me. I never hear anyone complaining about benefits or advantages that they receive in life, whether that be from the government or some other source – and everybody benefits from something. They only complain about what others are getting. Its the same old, I didn’t get it so why should they? Too bad. While college is not for everyone (nor is being a general contractor, a laborer, an entrepreneur, etc.), the more Americans who go to college the better as it will keep us competitive on the world stage. Having the best plumbers, hair stylists, landscapers is of great value here in the US but it does not improve our competitiveness on the world stage. If you haven’t noticed, foreigners are becoming an increasing percentage of college attendees because they are willing to pay the rising price of an education so if our goal is to educate the rest of the world then lets continue to make US college education financially accessible only to foreigners while weighing down our own kids with debt or lack of direction in life.
Cool story Greg! I’m sure if you tell all the older Millennials, many of whom paid off their loans just a year or two before the less responsible ones got their slates wiped clean, “So what?!” they’ll understand perfectly. They should have deferred payment and watched those interest rates rise until the a political opportunist took office. Shame on them for not predicting the future.
Better yet, tell all the plumbers, hairstylists and landscapers that their jobs are “of great value” but it is the art history and queer studies majors who “improve our competitiveness on the world stage”–so the bricklayers should subsidize the educations of people who paid $200K for school yet don’t know how to change a tire or sew a button.
Oh, and “foreigners are becoming an increasing percentage of college attendees” because those countries’ governments (mostly China) subsidize these students, since the value of US higher ed, though nearly worthless now, still had prestige as recently as 2013. And the Chi-Comms will keep sending their underlings here because the cost of a 4-year degree is peanuts compared to the opportunities to collect information on US institutions and subvert them. Secondly, foreigners are becoming an increasing percentage because a growing percentage of Americans a) cannot even secure the loans necessary and b) recognize that the value yields diminishing returns, because nobody needs people who major in gender studies, let alone those who major something with a modicum of utility, like German or comparative lit.
Those whiny plumbers need to shut up and recognize who the alpha caste is. Shut up and cough up.
It isn’t that someone is getting some thing I didn’t, but I PAID for mine. Worked overtime; worked a second job, etc. And I paid every penny. The first thing that needs to happen is to fix the broken loan system. Biden needs to stop buying votes by writing off a symptom of the real problem. If I signed a mortgage agreement to purchase a house for $300k and didn’t make the payment the mortgage company would forclose on the loan and I would lose the house. These people signed an agreement–they shoudl pay the money back. Just like it may not be the fault of the home purchaser that the economy tanked, lost their job, or got sick, this group of borrowers should have made a better decision. But now they need to pay the consequences.