US cancels 40,000 student loans and provides aid for 3.6 million more

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Parade participants protesting the high burden of student loans prepare to participate in the annual 4th of July parade in Ashland, Oregon, U.S., July 4, 2015. REUTERS/Randall Mikkelsen/File Photo

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April 19 (Reuters) – The U.S. Department of Education wrote off student loan debt for 40,000 people and offered credit to help another 3.6 million people repay their loans under a plan announced on Tuesday aimed at helping low-income borrowers and civil servants.

“Student loans were never meant to be a life sentence, but it certainly is for borrowers who are barred from the debt relief they are eligible for,” the secretary said at the Education, Miguel Cardona, in the press release.

The measures are in addition to other measures taken by President Joe Biden’s administration, including a pause in almost all student loan collections, but they stop before demands from the progressive wing of the Democratic Party for full forgiveness of student loans.

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During his 2020 presidential campaign, Biden called for the cancellation of $10,000 in student loan debt for each borrower, a commitment of more than $400 billion. Since his election, the White House has said Congress must take action for broader student loan relief.

The government said it was tackling “historic failures” to communicate to borrowers all the benefits they are entitled to under federal student loan programs.

At least 40,000 borrowers will benefit from immediate debt cancellation under the Public Service Loan Cancellation Program (PSLF).

Several thousand borrowers with older loans will also receive income-contingent repayment (IDR) forgiveness, plus an additional 3.6 million borrowers will receive at least three years of additional credit for IDR forgiveness. , the Ministry of Education said in a statement.

These programs cap the amount that low-income borrowers have to pay and cancel the remaining balance after a certain number of years.

Student loan debt is seen as a drag on the economy, burdening young professionals for years after graduation, while the wide availability of loans has contributed to rising tuition costs.

Some 43.4 million borrowers carry about $1.6 trillion in outstanding student loans from the federal loan portfolio, an average of more than $37,000 each, according to the Education Data Initiative.

The Biden administration canceled more than $17 billion in debt for 725,000 borrowers in its first year in office while extending a pause in loan repayments that provided at least temporary relief to 41 million borrowers , said the Ministry of Education.

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Reporting by Daniel Trotta; Editing by Sandra Maler

Our standards: The Thomson Reuters Trust Principles.

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