Joe Biden's Student Loan Forgiveness Package: Who Qualifies

President Joe Biden has approved an additional $9 billion in student debt relief on Wednesday, benefiting 125,000 borrowers, according to the White House.

It comes just days after federal student debt repayments resumed at the beginning of October, following more than three years of payment freezes initially introduced by the Trump administration in March 2020 as a response to the COVID-19 pandemic.

In June, the U.S. Supreme Court struck down the Biden administration's student debt relief proposal in a 6-3 decision, torpedoing a plan that would have provided $10,000 in relief to each ex-student borrower, and $20,000 for some of those from low-income backgrounds. In response, Biden pledged to find other ways to reduce the debt burden, working alongside the Department of Education.

Under Biden's proposal, which will be formally announced Wednesday afternoon at the White House, $5.2 billion will be made available for 53,000 borrowers who are part of public service loan forgiveness schemes.

An additional $2.8 billion will be provided to 51,000 borrowers who have been identified as never having received relief despite having paid student loans for at least 20 years, to be delivered through corrections to income-driven repayment.

A further $1.2 billion worth of relief will be made available to ex-student borrowers who have a total or permanent disability.

"President Biden has long believed that college should be a ticket to the middle class, not a burden that weighs on families," the White House said in a statement on its official website. "That's why from day one, his Administration has taken unprecedented steps to fix the broken student loan system, make college more affordable, and bring the promise of higher education in reach for more Americans.

"Marking a key step forward in that effort, President Biden is announcing that an additional 125,000 Americans have been approved for $9 billion in debt relief through fixes his Administration has made to income-driven repayment (IDR) and Public Service Loan Forgiveness, and by cancelling debt for borrowers with total and permanent disabilities.

"Today's announcement brings the total approved debt cancellation by the Biden-Harris Administration to $127 billion for nearly 3.6 million Americans."

The move was welcomed in a statement by Education Secretary Miguel Cardona, who said: "The Biden-Harris administration's laser-like focus on reducing red tape, addressing past administrative failures, and putting borrowers first have now resulted in a historic $127 billion in debt relief approved for nearly 3.6 million borrowers.

"Today's announcement builds on everything our administration has already done to protect students from unaffordable debt, make repayment more affordable, and ensure that investments in higher education pay off for students and working families."

On Monday, Shannon Seery, a Wells Fargo economist, dampened fears that the resumption of student debt payments this month would push the U.S. economy into recession.

"When you put it on top of some other factors, such as dwindling liquidity and higher borrowing costs, I do think it's another factor that's going to cause consumer spending to slow," Seery said. "But again, by itself, it's not the factor that breaks the camel's back in terms of the consumer."

The average household student loan payment is about $200 to $300 a month, representing about 5 percent of the median American salary.