Benzinga - by Anthony Noto, Benzinga Editor.
President Joe Biden isn’t reneging on promises to cancel student loan debt.
What Happened: According to the Wall Street Journal, the Biden administration is expected to announce a renewed proposal to reduce or eliminate student loan debt for millions of borrowers.
The Journal, citing unnamed sources, expects Biden’s announcement to occur next week.
The move seemingly defies a decision by the Supreme Court, which overturned the administration's first debt cancellation plan in 2023. That first attempt would have wiped up to $20,000 in student debt for borrowers making less than $125,000.
However, the Biden administration clapped back in February. It unveiled a forgiveness plan of about $1.2 billion in student loans, relieving more than 150,000 borrowers.
“Thanks to the Biden-Harris Administration’s SAVE plan, starting today, the Administration will be cancelling debt for borrowers who are enrolled in the SAVE plan, have been in repayment for at least 10 years and took out $12,000 or less in loans for college,” the White House announced at the time.
The Biden administration’s program aims to ease the burden on Americans who have been repaying for at least a decade.
The total amount of relief approved by the Biden administration stands at nearly $138 billion. It benefits more than 4 million borrowers.
This number may increase as more individuals become eligible for forgiveness under the SAVE program, which currently has 6.9 million participants.
Despite these efforts, they fall short of Biden's initial proposal for broader student loan cancellation, which the U.S. Supreme Court rejected last year.
Why It Matters: In 2023, the administration agreed to forgive $39 billion in student debt by updating a technical requirement under an existing program.
Despite the Supreme Court's ruling against it, the administration flagged $127 billion of federal student loans for potential cancellation.
According to EducationData.org, the average debt for a four-year bachelor's degree is $34,700.
Tickers To Watch: Student loan collection companies, like SoFi Technologies (NASDAQ:SOFI), saw modest movement on Friday, April 5, on the heels of the news.
SoFi, which counts student loans as a significant chunk of the company’s total lending products, saw its stock price go up more than 0.85% to $7.37 a share as of press time.
SLM Corp. (NASDAQ:SLM) was also in the green, trading at $21.12 a share — up by 0.31%.
Discover Financial Services (NYSE:DFS), rumored to be selling its student-loan unit, is up slightly by 0.1% and trading at $125.11 a share.
Meanwhile, Nelnet Inc. (NYSE:NNI) and Navient Corp. (NASDAQ:NAVI) were both in the red. Nelnet was down more than 0.65%, trading at $93.05; Navient’s stock price was down 0.06%, trading at $16.86 a share.
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