277,000 aided as Biden cancels $7.4bn in student loan debt

US President Joe Biden has announced the cancellation of $7.4 billion in student loans, in a move set to benefit over 277,000 people.

Framed as “Plan B”, the move comes after Biden’s original proposal, a suggested clearing of up to $20,000 in student debt per borrower, was deemed unconstitutional by the United States Supreme Court in June 2023.

That plan would have seen the loans of around 20 million students forgiven, fulfilling a key pledge made during Biden’s 2020 presidential campaign.

But the Supreme Court, which is aligned with the opposition Republican Party, struck down the plans last year, throwing the success of the pledge into doubt ahead of elections in November 2024.

This new announcement is the latest in a series of moves which have since been taken by the Biden administration, in a bid to save the policy by using existing provisions.

The White House has claimed its full plans will see the cancellation of student debts for over 30 million Americans

It largely focuses on those enrolled in the Saving on a Valuable Education (SAVE) plan, the federal repayment scheme for low-income borrowers launched in August, that has allowed some of the lowest earners to pay $0 instalments.

The scheme considers the borrower’s house size and income, taking a set portion of this monthly. Once a certain number of monthly payments have been met – under the SAVE plan, ten years’ worth – full forgiveness of the loan is possible.

To date, the Biden-Harris administration has cancelled $153 billion in debt for 4.3 million people, with the new effort intending to completely forgive the debts of an additional four million, and eliminate the loan interest of 23 million.

Overall, the White House has claimed its full plans will see the cancellation of student debts for over 30 million Americans.

With polling having found that 48% of voters deem student debt an “important issue,” President Biden’s plans represent a key effort to secure re-election in the presidential election this November.

Too many people feel the strain and stress […] because even if they get by, they still have this crushing, crushing debt

President Joe Biden

Biden will face former President Donald Trump, the Republican presumptive nominee, who has announced his opposition to student loan forgiveness.

Over 40 million Americans have student debt, with an average of $37,000 per borrower. With current polls having shown the two candidates neck-and-neck for months, Democrats will hope these efforts can give Biden’s campaign a much-needed boost.

Announcing the plans, President Biden said: “Too many people feel the strain and stress wondering if they can get married, have their first child, start a family, because even if they get by, they still have this crushing, crushing debt.”

He added: “Now, thanks to what we’re doing, that debt is no longer holding you back.”

The White House affirmed that it was taking “every path available” to cancel debt for as many people as possible.