Friday’s announcement is just the latest round of student debt cancellation enacted by the Biden administration, which has approved relief for more than 4.3 million people so far, including 44,380 people in Wisconsin.
The president’s plan builds on existing debt cancellation efforts and would extend loan relief to more than 30 million borrowers.
The new proposal will focus on providing debt relief to those with older loans or loans with large sums of interest; those with high-cost, unavoidable child care or health care expenses; borrowers who are highly likely to default; and others who face “financial hardship.”
More than 28,000 Wisconsinites have had their student debt discharged or have been identified for debt relief due to the Biden administration's reforms of the student loan debt system.
This round of debt relief will eliminate the debt of 125,000 borrowers nationwide: 22,000 with disabilities, 51,000 through an income-driven repayment plan, and 53,000 through the Public Service Loan Forgiveness program.
Nearly half of all borrowers say they aren't financially prepared to begin repaying their debt. Despite this, interest began accruing again on Sept. 1, and payments will be due again in October.
The Biden administration has begun the process of creating a new plan for widespread loan cancellation and implementing the SAVE Plan, which will cut monthly payments to $0 for millions of borrowers. There will also be a 12-month “on-ramp” period to ease borrowers back into making payments.
For many borrowers, qualifying monthly payments that should have moved them closer to forgiveness were not accounted for, effectively forcing them to make extra payments under their IDR plans.
Nationwide, more than 45 million people owe $1.6 trillion in federal loans for college, according to government data, and as many as 43 million of them stood to benefit from the cancellation program.
About 90% of the benefits from Biden's plan will go to families earning less than $75,000 according to the White House, but a group of Republican-led states have sued to block it.
