As student loan payments resume, Biden cancels $9 billion in debt

WASHINGTON — President Joe Biden detailed $9 billion in new student-loan relief, saying it would provide a boost to the U.S. economy as he sought to reassure Americans resuming payments that the administration is working to ease their debt burdens.

“This kind of relief is life-changing for individuals and their families. But it’s good for our economy as a whole as well,” Biden said Wednesday at the White House.

“By freeing millions of Americans from the crushing burden of student debt, it means they can go and get their lives in order,” Biden added. “They can think about buying a house, they can start a business or starting a family. This matters. This matters in their daily lives.”

Biden campaigned on the issue of tackling the nation’s $1.7 trillion student-debt problem and has tried to chip away at the issue using other avenues after the Supreme Court struck down his $400 billion program to provide relief to more than 40 million borrowers. That plan was popular with progressives, young people and Black voters who helped Biden win in 2020 and are critical to his reelection bid.

The latest relief comes as millions of Americans resume student loan payments.

Moratoriums on payments, first put in place by then-President Donald Trump in 2020 as COVID-19 lockdowns began, were extended multiple times. Biden and House Republicans this summer agreed to allow those payments to resume as part of a deal over the nation’s debt limit. Interest accruals resumed on Sept. 1, and bills will start coming due in October.

The moratorium on student-loan repayments provided financial relief during the pandemic. The resumption, though, threatens to further strain household budgets at a time when Americans say they are feeling the sting of high inflation and polls show them anxious about the overall state of the economy.

The economy remains a political liability for Biden even as data shows a strong jobs market and resilient growth. A majority of Americans say Republicans will do a better job bolstering the economy, a Gallup poll Tuesday found, giving the party its widest lead over Democrats on that metric in three decades.

The administration’s latest steps will bring relief for 125,000 borrowers through changes to programs intended to aid public servants, Americans with disabilities and low-income borrowers, according to the White House.

That total includes $5.2 billion in debt relief for 53,000 borrowers in public service loan forgiveness programs.

The administration also identified 51,000 additional borrowers who paid for at least 20 years but never got relief and will provide them nearly $2.8 billion in debt relief through fixes to income-driven repayment.

Another $1.2 billion in relief will go to about 22,000 borrowers deemed to have a total or permanent disability, the White House said.

The moves bring the total debt cancellation approved by the administration to $127 billion, aiding about 3.6 million Americans.