Biden Administration Announces $7.4 Billion Student Debt Cancellation for 277,000 Borrowers

In his plans, Biden highlighted a notable policy to erase up to $20,000 in accrued and capitalized interest for all borrowers.

The Biden administration has declared a cancellation of $7.4 billion in student debt for 277,000 borrowers, marking another significant step in a series of debt relief actions, as stated by the White House last Friday.

This decision is part of President Joe Biden’s broader efforts to alleviate the student debt burden affecting at least 23 million Americans.

During a recent announcement on Monday, Biden emphasized the importance of this initiative for young voters, whose backing is crucial as he campaigns for re-election this November.

In his plans, Biden highlighted a notable policy to erase up to $20,000 in accrued and capitalized interest for all borrowers.

This measure is projected to completely eliminate such interest for approximately 23 million individuals.

“Those plans include canceling up to $20,000 of accrued and capitalized interest for borrowers, regardless of income, which Biden’s administration estimates would eliminate the entirety of that interest for 23 million borrowers,” Biden remarked.

The relief extends to various groups including participants in the SAVE Plan, those enrolled in Income-Driven Repayment schemes, and beneficiaries of the Public Service Loan Forgiveness program.

This follows a previous announcement in March where $6 billion was waived for 78,000 borrowers.

To date, the administration has sanctioned a total of $153 billion in debt relief benefiting 4.3 million Americans.

The initiative continues despite setbacks, such as a Supreme Court ruling in June that thwarted a more ambitious plan proposed by Biden to cancel $430 billion in student loans.

In light of this, Biden committed to exploring alternative routes for debt relief.

The subject of student debt remains a polarizing issue, particularly among younger voters who also express reservations about Biden’s foreign policy decisions, like his stance on the Gaza conflict. Criticisms extend to the pace and extent of his debt forgiveness measures.

The opposition, notably from Republicans and former President Donald Trump’s campaign, has labeled these debt cancellations as executive overreaches and unjust favors to college-educated individuals, arguing that they exclude other types of borrowers.

Research from the Brookings Institution reveals that about half of the federal student loan debt is carried by individuals with graduate degrees.

According to a 2023 Department of Education report, graduate students received 47% of federal loan disbursements in the 2021-22 period, although they constitute just 21% of borrowers.