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President Joe Biden said on Monday at an event in Madison, Wisconsin, that his latest efforts to reduce or eliminate student debt would be a boon to the US economy.
Mr Biden said his administration’s newest initiatives are an outgrowth of his promise to find “alternative paths to reduce student debt” loads that have become “so burdensome” that many borrowers simply can’t repay what they owe, making student debt a problem because it keeps Americans from starting businesses, or buying homes, or starting families in many cases.
“It’s a drag on economies… when you can’t afford to buy a home, start that small business, chase that career that you’ve been dreaming about for a long time,” he said.
He also said the new programmes would “give everybody a fair shot” and the “freedom to chase their dreams” by building on two existing programmes his administration has reformed – Public Service Loan Forgiveness and the Income-Driven Repayment Plan – both of which now help more than 25,000 Americans per month to see their student debts entirely forgiven, and have lowered payments for hundreds of thousands more.
The president’s trip to Madison, the Badger State’s capital and the location of its’ flagship state university, came as part of a push to shore up support from younger voters ahead of the 2024 presidential election.
During his 2020 campaign against then-president Donald Trump, Mr Biden made forgiving Americans’ student loans a significant part of his pitch to college-aged and millennial-generation voters, many of whom are saddled with massive debts from undergraduate or graduate studies.
An initial attempt by Mr Biden to forgive $10,000 of debt for every student borrower using Covid-era authorities died after the US Supreme Court sided with Republican attorneys general, who sued to block the proposal.
At the time, he vowed to press on with debt relief efforts.
And since then, the president has rolled out several new initiatives, making use of different statutory provisions allowing the Department of Education to waive or modify loan provisions or forgive debts under some circumstances. His administration has also worked to make it easier for borrowers to access income-based repayment plans under which debt can be forgiven after many years of repayment.
Speaking to reporters ahead of Mr Biden’s visit to Wisconsin, White House press secretary Karine Jean-Pierre said Monday’s announcement is a result of his promise to press on with debt relief and said the new initiatives could be up and running as soon as this fall.
The programmes unveiled on Monday are part of a new tranche of efforts to reduce young voters debt loads, which the White House says would provide relief to more than 30 million Americans when combined with other initiatives.
The White House also said the administration has thus far eliminated “$146bn in student debt relief for four million Americans through more than two dozen executive actions” since Mr Biden took office in January 2021.
“Last June, in the wake of the Supreme Court’s decision blocking the Biden-Harris Administration’s original student debt relief plan, President Biden vowed to keep fighting to deliver student debt relief to borrowers held back by the burden of student loan debt. Immediately following that, the Department of Education began pursuing an alternative path to debt relief through negotiated rulemaking under the Higher Education Act,” the White House said in a statement, adding later that the plans announced today would “fully eliminate accrued interest for 23 million borrowers, would cancel the full amount of student debt for over four million borrowers, and provide more than 10 million borrowers with at least $5,000 in debt relief or more”.
One new programme would eliminate up to $20,000 in accrued interest for borrowers who now owe more interest than when they began to repay their loans. For borrowers under a certain income threshold, it would cancel all of the interest-based debt accrued by those borrowers.
Another new action would automatically forgive debt for borrowers who are eligible for the public service programme but have not applied for it because they were unaware of it, while yet another new initiative would forgive loans for borrowers who’ve been repaying their debt for more than two decades.
“This relief can be life changing,” said Mr Biden, who added that the new programmes would be “for the good of our economy”.
“It’s growing stronger and stronger and by freeing millions of Americans from this crushing student debt, it means they can finally get on with their lives,” he said.
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