With the latest student loan forgiveness, the Biden administration said it has waived $168.5 billion in debt for roughly 4.8 million Americans, according to a statement from the Department of Education. That represents about 1 in 10 student loan borrowers, it added.

The people who qualify for forgiveness in the latest round of debt cancellation are part of the Public Service Loan Forgiveness (PSLF) program, which is designed to help public servants such as teachers, nurses and law enforcement officers get their debt canceled after 10 years of repayments. While PSLF has been around since 2007, until recently very few borrowers were able to get debt relief due to its notoriously complex regulations and often misleading guidance from loan companies.

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WASHINGTON (AP) — The White House is moving forward with a proposal that would lower student debt payments for millions of Americans now and in the future, offering a new route to repay federal loans under far more generous terms.

President Joe Biden announced the repayment plan in August, but it was overshadowed by his sweeping plan to slash or eliminate student debt for 40 million Americans. Despite the low profile of the payment plan, however, some education experts see it as a more powerful tool to make college affordable, especially for those with lower incomes.

Education Department officials on Tuesday called the new plan a “student loan safety net” that will prevent borrowers from getting overloaded with debt.

“Student debt has become a dream killer,” Education Secretary Miguel Cardona said. “This is a promise to the American people that, at long last, we will fix a broken system and make student loans affordable.”

Biden, a Democrat, is moving forward with the repayment plan even as his one-time debt cancellation faces an uncertain fate before the Supreme Court. The White House has asked the court to uphold the plan and reject two legal challenges from conservative opponents. The Biden administration submitted its brief last week, with oral arguments slated for Feb. 28.

The Education Department formally proposed the new repayment plan on Tuesday by publishing it in the Federal Register, starting a public comment period that often takes months to navigate.

If it’s finalized, the proposal would give a major overhaul to income-driven repayment plans — one of several payment options offered by the federal government. The resulting plan would have lower monthly payments, an easier path to forgiveness and a promise that unpaid interest will not be added to a borrower’s loan balance.

The federal government now offers four types of income-driven plans, but the proposal would mostly phase out three of them while focusing on one simplified option, scaling back the confusing array of options borrowers now face.

Under existing plans, monthly payments are capped at 10% of a borrower’s discretionary income, and those earning less than $20,400 a year aren’t required to make payments. The new proposal would cap payments for undergraduate loans at 5% of borrowers’ discretionary pay, cutting their bills in half, and require payments only for those who earn more than about $30,000 a year.

As long as borrowers make their monthly payments, any unpaid interest would not be charged. The change is meant to prevent borrowers from having unpaid interest added to their loan balance, a practice that can cause debt to snowball even as borrowers make payments.

Significantly, the proposal would also make it easier to get debt erased after making several years of payments. Existing plans promise to cancel any remaining debt after 20 or 25 years of payments. The new plan would erase all remaining debt after 10 years for those who took out $12,000 or less in loans. For every $1,000 borrowed beyond that, a year would be added.

Typical graduates of a four-year university would save about $2,000 a year compared with today’s plans, the Biden administration says, while 85% of community college borrowers would be debt-free within 10 years.

Supporters see the proposal as a significant stride toward college affordability. Some say it’s so generous that it approaches free community college — a campaign promise that Biden has pushed but failed to deliver.

The Institute for College Access and Success, a nonprofit organization that promotes college affordability, praised the proposal as a significant improvement over existing plans.

“The changes proposed today would provide meaningful financial relief to millions of borrowers and help shield students from debt that has not paid off, including those who start college but do not complete a degree,” said Sameer Gadkaree, the group’s president.

Opponents on the right blast the revamped plan as an unfair handout with a steep price tag. The Biden administration estimates the repayment plan would cost nearly $138 billion over the decade, and some critics have put it closer to $200 billion.

Republican Rep. Virginia Foxx, chairwoman of the House Committee on Education and the Workforce, said the proposal turns the federal loan program into “an untargeted grant with complete disregard for the taxpayers that fund it.”

“Because President Biden couldn’t get his radical free college agenda through Congress, he has resorted to doing it through the backdoor by executive fiat,” Foxx said in a statement.

Even some on the left have questioned the prudence of the idea, saying it’s so generous that it effectively turns student loans into grants that don’t need to be repaid. That could lead more students to borrow, they warn, and it could spur colleges to raise tuition prices if they know students won’t be on the hook.

Still others have urged the administration to abandon income-driven payment plans entirely, calling them a failed policy. Critics cite a federal report from last year finding that sloppy oversight of the program left thousands of borrowers stuck with debt that should have been forgiven.

Cardona said his agency is working on other proposals that would hold colleges accountable if their students get overburdened with debt. One idea promoted by Biden is to warn the public about programs that leave graduates saddled with debt.

The Education Department on Tuesday began the process to deliver that goal, asking the public about the best way to identify “low-value” programs.

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The Associated Press education team receives support from the Carnegie Corporation of New York. The AP is solely responsible for all content.

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WASHINGTON (AP) — President Joe Biden announced Tuesday that his administration will extend a pause on federal student loan payments while the White House fights a legal battle to save his plan to cancel portions of the debt.

“It isn’t fair to ask tens of millions of borrowers eligible for relief to resume their student debt payments while the courts consider the lawsuit,” Biden said in a video posted on Twitter.

The moratorium was slated to expire Jan. 1, a date that Biden set before his debt cancellation plan stalled in the face of legal challenges from conservative opponents.

Now it will extend until 60 days after the lawsuit is resolved. If the lawsuit has not been resolved by June 30, payments would resume 60 days after that.

Biden’s plan promises $10,000 in federal student debt forgiveness to those with incomes of less than $125,000, or households earning less than $250,000. Pell Grant recipients, who typically demonstrate more financial need, are eligible for an additional $10,000 in relief.

More than 26 million people already applied for the relief, with 16 million approved, but the Education Department stopped processing applications this month after a federal judge in Texas struck down the plan.

The Justice Department last week asked the Supreme Court to examine the issue and reinstate Biden’s debt cancellation plan. By extending the pause, the administration says it’s giving the court a chance to resolve the case in its current term.

“I’m completely confident my plan is legal,” Biden said Tuesday.

Biden announced the decision a day after more than 200 advocacy groups urged him to extend the pause, warning that starting payment in January would cause “financial catastrophe” for millions of borrowers.

The White House has argued in court that Americans continue to feel the financial stress of the pandemic. Without Biden’s cancellation plan, it says, the number of people falling behind on student loans could rise to historic levels.

The greatest risk is for about 18 million borrowers who were told their entire loan balance would be canceled. Even if payments restart, those borrowers might think they’re in the clear and ignore the bills, the Education Department has warned.

But at the same time, the White House has warned that extending the payment pause will cost several billion dollars a month in lost revenue. The moratorium has already cost the government more than $100 billion in lost payments and interest, according to the General Accountability Office.

The Biden administration didn’t address the costs in its announcement, but instead cast blame on Republicans challenging the plan.

“Callous efforts to block student debt relief in the courts have caused tremendous financial uncertainty for millions of borrowers who cannot set their family budgets or even plan for the holidays without a clear picture of their student debt obligations,” Education Secretary Miguel Cardona said.

“It’s just plain wrong,” he added.

Critics such as the Committee for a Responsible Federal Budget have opposed any further extension, saying it could worsen inflation and raise the risk of economic recession.

But supporters of Biden’s plan applauded the action, saying it provides a cushion to working-class Americans.

“This extension means that struggling borrowers will be able to keep food on their tables during the holiday season — and the coming months — as the administration does everything it can to beat back the baseless and backward attacks on working families with student debt,” said Mike Pierce, executive director of the Student Borrower Protection Center.

The legality of broad student debt cancellation has been in question since before Biden took office. Supporters say federal law already gives the Education Department wide flexibility to cancel student loans, while opponents argue that only Congress has the power to cancel debt at that scale.

In announcing its plan, the Biden administration invoked the HEROES Act of 2003, a post-Sept. 11, 2001, law meant to help members of the military. The Justice Department says the law offers sweeping authority to cancel student debt during a national emergency. Biden has said the relief is needed to help Americans recover from the pandemic.

A federal judge in Texas struck down that rationale this month, saying Biden overstepped his power. The HEROES Act “does not provide the executive branch clear congressional authorization to create a $400 billion student loan forgiveness program,” wrote District Court Judge Mark Pittman, who was appointed by former President Donald Trump.

The Justice Department is asking an appeals court in New Orleans to suspend Pittman’s order while the administration appeals. It’s separately asking the Supreme Court to overrule a federal court in St. Louis that halted Biden’s plan in response to a lawsuit from six Republican-led states.

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ST. LOUIS (AP) — A federal judge on Thursday dismissed an effort by six Republican-led states to block the Biden administration’s plan to forgive student loan debt for tens of millions of Americans.

U.S. District Judge Henry Autrey in St. Louis wrote that because the six states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — failed to establish they had standing, “the Court lacks jurisdiction to hear this case.”

Suzanne Gage, spokeswoman for Nebraska Attorney General Doug Peterson, said the states will appeal. She said in a statement that the states “continue to believe that they do in fact have standing to raise their important legal challenges.”

Democratic President Joe Biden announced in August that his administration would cancel up to $20,000 in education debt for huge numbers of borrowers. The announcement immediately became a major political issue ahead of the November midterm elections.

The states’ lawsuit is among a few that have been filed. Earlier Thursday, Supreme Court Justice Amy Coney Barrett rejected an appeal from a Wisconsin taxpayers group seeking to stop the debt cancellation program.

Barrett, who oversees emergency appeals from Wisconsin and neighboring states, did not comment in turning away the appeal from the Brown County Taxpayers Association. The group wrote in its Supreme Court filing that it needed an emergency order because the administration could begin canceling outstanding student debt as soon as Sunday.

In the lawsuit brought by the states, lawyers for the administration said the Department of Education has “broad authority to manage the federal student financial aid programs.” A court filing stated that the 2003 Higher Education Relief Opportunities for Students Act, or HEROES Act, allows the secretary of education to waive or modify terms of federal student loans in times of war or national emergency.

“COVID-19 is such an emergency,” the filing stated.

The Congressional Budget Office has said the program will cost about $400 billion over the next three decades. James Campbell, an attorney for the Nebraska attorney general’s office, told Autrey at an Oct. 12 hearing that the administration is acting outside its authorities in a way that will cost states millions of dollars.

The plan would cancel $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, will get an additional $10,000 in debt forgiven.

Conservative attorneys, Republican lawmakers and business-oriented groups have asserted that Biden overstepped his authority in taking such sweeping action without the assent of Congress. They called it an unfair government giveaway for relatively affluent people at the expense of taxpayers who didn’t pursue higher education.

Chris Nuelle, spokesman for Missouri Attorney General Eric Schmitt, said the plan “will unfairly burden working class families with even more economic woes.”

Many Democratic lawmakers facing tough reelection contests have distanced themselves from the plan.

The HEROES Act was enacted after 9/11 to help members of the military. The Justice Department says the law allows Biden to reduce or erase student loan debt during a national emergency. Republicans argue the administration is misinterpreting the law, in part because the pandemic no longer qualifies as a national emergency.

Justice Department attorney Brian Netter told Autrey that fallout from the COVID-19 pandemic is still rippling. He said student loan defaults have skyrocketed over the past 2 1/2 years.

The cancellation applies to federal student loans used to attend undergraduate and graduate school, along with Parent Plus loans. Current college students qualify if their loans were disbursed before July 1.

The plan makes 43 million borrowers eligible for some debt forgiveness, with 20 million who could get their debt erased entirely, according to the administration.

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WASHINGTON (AP) — Millions of Americans were waiting to learn the fate of their federal student debt on Wednesday as President Joe Biden prepared to deliver on his campaign promise to provide up to $10,000 in debt cancellation.

Details of the plan have been kept closely guarded, but borrowers who earn less than $125,000 a year would be eligible for the loan forgiveness, according to three people familiar with the decision. Biden is also set to extend a pause on federal student loan payments through January.

If it survives legal challenges that are almost certain to come, Biden’s plan could offer a windfall to a swath of the nation in the run-up to this fall’s midterm elections. More than 43 million owe a combined $1.6 trillion in federal student debt, with almost a third owing less than $10,000, according to federal data.

Still, the action is unlikely to thrill any of the factions that have been jostling for influence as Biden weighs how much to cancel and for whom.

Biden has faced pressure from liberals to provide broader relief to hard-hit borrowers, and from moderates and Republicans questioning the fairness of any widespread forgiveness. The delay in Biden’s decision has only heightened the anticipation for what his own aides acknowledge represents a political no-win situation. The people spoke on the condition of anonymity to discuss Biden’s intended announcement ahead of time.

The continuation of the pandemic-era payment freeze comes just days before millions of Americans were set to find out when their next student loan bills will be due. This is the closest the administration has come to hitting the end of the payment freeze extension, with the current pause set to end Aug. 31.

Wednesday’s announcement was set for the White House after Biden returns from vacation in Rehoboth Beach, Delaware. The administration had briefly considered higher education schools in the president’s home state for a larger reveal, but scaled back their plans.

During the 2020 presidential campaign, Biden was initially skeptical of student loan debt cancellation as he faced off against more progressive candidates for the Democratic nomination. Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., had proposed cancellations of $50,000 or more.

As he tried to shore up support among younger voters and prepare for a general election battle against President Donald Trump, Biden unveiled his initial proposal for debt cancellation of $10,000 per borrower, with no mention of an income cap.

Biden narrowed his campaign promise in recent months by embracing the income limit as soaring inflation took a political toll and as he aimed to head off political attacks that the cancellation would benefit those with higher take-home pay. But Democrats, from members of congressional leadership to those facing tough reelection bids this November, have pushed the administration to go as broad as possible on debt relief, seeing it in part as a galvanizing issue, particularly for Black and young voters this fall.

The frenzied last-minute lobbying continued Tuesday even as Biden remained on his summer vacation. Senate Majority Leader Chuck Schumer, D-N.Y., one of the loudest advocates in recent years for canceling student loan debt, spoke privately on the phone with Biden, imploring the president to forgive as much debt as the administration can, according to a Democrat with knowledge of the call.

In his pitch, Schumer argued to Biden that doing so was the right thing morally and economically, said the Democrat, who asked for anonymity to describe a private conversation.

Inside the administration, officials have discussed since at least early summer forgiving more than $10,000 of student debt for certain categories of borrowers, such as Pell Grant recipients, according to three people with knowledge of the deliberations. That remained one of the final variables being considered by Biden heading into Wednesday’s announcement.

Democrats are betting that Biden, who has seen his public approval rating tumble over the last year, can help motivate younger voters to the polls in November with the announcement.

Although Biden’s plan is narrower than what he initially proposed during the campaign, “he’ll get a lot of credit for following through on something that he was committed to,” said Celinda Lake, a Democratic pollster who worked with Biden during the 2020 election.

She described student debt as a “gateway issue” for younger voters, meaning it affects their views and decisions on housing affordability and career choices. A survey of 18- to 29-year-olds conducted by the Harvard Institute of Politics in March found that 59% of those polled favored debt cancellation of some sort — whether for all borrowers or those most in need — although student loans did not rank high among issues that most concerned people in that age group.

Some advocates were already bracing for disappointment.

“If the rumors are true, we’ve got a problem,” Derrick Johnson, the president of the NAACP, which has aggressively lobbied Biden to take bolder action, said Tuesday. He emphasized that Black students face higher debut burdens than white students.

“President Biden’s decision on student debt cannot become the latest example of a policy that has left Black people — especially Black women — behind,” he said. “This is not how you treat Black voters who turned out in record numbers and provided 90% of their vote to once again save democracy in 2020.”

John Della Volpe, who worked as a consultant on Biden’s campaign and is the director of polling at the Harvard Kennedy School Institute of Politics, said the particulars of Biden’s announcement were less important than the decision itself.

“It’s about trust in politics, in government, in our system. It’s also about trust in the individual, which in this case is President Biden,” Della Volpe said.

Combined with fears about expanding abortion restrictions and Trump’s reemergence on the political scene, Della Volpe said student debt forgiveness “adds an additional tailwind to an already improving position with young people.”

Republicans, meanwhile, see only political upside if Biden pursues a large-scale cancellation of student debt ahead of the November midterms, anticipating backlash for Democrats — particularly in states where there are large numbers of working-class voters without college degrees. Critics of broad student debt forgiveness also believe it will open the White House to lawsuits, on the grounds that Congress has never given the president the explicit authority to cancel debt on his own.

The Republican National Committee on Tuesday blasted Biden’s expected announcement as a “handout to the rich,” claiming it would unfairly burden lower-income taxpayers and those who have already paid off their student loans with covering the costs of higher education for the wealthy.

“My neighbor, a detective, worked 3 jobs (including selling carpet) & his wife worked to make sure their daughter got quality college degree w/no student debt,” Rep. Kevin Brady, R-Texas, the top Republican on the House Ways and Means Committee, tweeted Tuesday. “Big sacrifice. Now their taxes must pay off someone else’s student debt?”

Biden’s elongated deliberations have sent federal loan servicers, who have been instructed to hold back billing statements while Biden weighed a decision, grumbling.

Industry groups had complained that the delayed decision left them with just days to notify borrowers, retrain customer service workers and update websites and digital payment systems, said Scott Buchanan, executive director of the Student Loan Servicing Alliance.

It increases the risk that some borrowers will inadvertently be told they need to make payments, he said.

“At this late stage I think that’s the risk we’re running,” he said. “You can’t just turn on a dime with 35 million borrowers who all have different loan types and statuses.”

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WASHINGTON (AP) — The Biden administration plans to freeze federal student loan payments through Aug. 31, extending a moratorium that has allowed millions of Americans to postpone payments during the coronavirus pandemic, according to an administration official familiar with the White House’s decision-making.

Student loan payments were scheduled to resume May 1 after being halted since early in the pandemic. But following calls from Democrats in Congress, the White House plans to give borrowers additional time to prepare for payments.

The action applies to more than 43 million Americans who owe a combined $1.6 trillion in student debt held by the federal government, according to the latest data from the Education Department. That includes more than 7 million borrowers who have defaulted on student loans, meaning they are at least 270 days late on payments.

Borrowers will not be asked to make payments until after Aug. 31, and interest rates are expected to remain at 0% during that period.

The extension was first reported Tuesday by Bloomberg.

Democrats on education panels in the House and Senate recently urged President Joe Biden to extend the moratorium through the end of the year, citing continued economic upheaval.

Sen. Patty Murray said more time is needed to help Americans prepare for repayment and to rethink the government’s existing system for repaying student debt.

“It is ruining lives and holding people back,” she said in a statement last month. “Borrowers are struggling with rising costs, struggling to get their feet back under them after public health and economic crises, and struggling with a broken student loan system — and all this is felt especially hard by borrowers of color.”

Murray called on the Biden administration to lift all borrowers out of default to provide a “fresh start” following the pandemic.

The decision is being made amid rising concern that large numbers of Americans would quickly fall behind if payments restarted in May.

In March, the St. Louis Federal Reserve Bank warned that resuming loan payments could place a heavy burden on borrowers who faced financial hardship during the pandemic. It said the impact would be hardest on Black families, who are more likely to rely on student loans to pay for college.

“Serious delinquency rates for student debt could snap back from historic lows to their previous highs in which 10% or more of the debt was past due,” the bank said.

The Trump administration initially gave Americans the option to suspend loan payments in March 2020, and Congress made it automatic soon after. The pause was extended twice by the Trump administration and twice more under Biden.

It remains in question whether Biden will pursue widespread debt forgiveness to reduce the nation’s student debt. Some Democrats in Congress have pressed Biden to use executive action to cancel $50,000 for all student loan borrowers, saying it would jumpstart the economy and help Black Americans who on average face higher levels of student debt.

Last year, Biden asked the Education and Justice departments to review the legality of widespread debt cancellation, but no decision has been announced. Biden previously said he supports canceling up to $10,000, but he argued it should be done through congressional action.

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