Biden administration forgives an additional $7.4 billion in student loans

In a bid to woo the young generation in the upcoming elections, United States President Joe Biden's administration has announced to cancel $7.4 billion more in student loans.

In order to ease thestudents off the debt, the White House will be reaching out to 277,000 borrowers via email on Friday (April 12) to let them know their debts are being forgiven.

Education Secretary Miguel Cardona said during a call with reporters, the administration's purpose is to provide relief and highlighted the potential benefits of making higher education more accessible to all Americans.

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The Biden administration has been keeping the public informed as it progresses with its debt relief efforts. With this latest announcement, President Biden has now approved a total of $153 billion in loan forgiveness for nearly 4.3 million individuals.

The majority of the newly forgiven loans will benefit 206,800 borrowers enrolled in Biden's Save repayment plan. This plan links monthly loan payments to income and family size, allowing borrowers who borrowed less than $12,000 to have their debts cleared after 10 years of payments, rather than the typical 20 to 25 years under other repayment plans.

Additionally, 65,700 borrowers who have been repaying their loans for over 20 or 25 years will have their balances cancelled through a temporary waiver of the rules governing income-driven repayment plans. This adjustment, introduced two years ago, aims to address inconsistencies in how loan servicers have handled and tracked payments.

The remaining 4,600 borrowers set to have their debts cancelled are public servants benefiting from the Public Service Loan Forgiveness program. This program erases the balances of individuals who spend a decade repaying their loans while working for the government or a nonprofit organisation.

Who will benefit from Biden's new proposal?

The new proposal of Biden will offer cancellation of loans to five categories of borrowers.

According to the proposal, the student loan of those borrowers whose debt has grown due to unpaid interest will be cancelled.

The government will cancel around $20,000 in interest for Americans who currently oweway more than what they had borrowed originally.

However, this cap will not be applicable to individuals who earn less than $120,000 every year or couples whose income is less than $240,000 and have enrolled themselves in an income-driven repayment plan.

According to the Education Department, 25 million people will be eligible for that relief, which includes 23 million whose interest will be completely erased.

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In the new proposal, the loans will also get cancelled for the borrowers who are eligible for different federal forgiveness programmes but have not applied. It is also applicable to the Public Service Loan Forgiveness programme and income-driven repayment plans.

The debt of the borrowers, who have been repaying undergraduate loans for 20 years or more, will be cancelled. Those who have been paying graduate school debt for the last 25 years will also get relief as per the proposal.

The Biden administration has claimed to cancel the loans of more than two million people.

(With inputs from agencies)