WASHINGTON (AP) — The Biden administration is canceling student loans for another 206,000 borrowers as part of a new repayment plan that offers a faster route to forgiveness.
The Education Department announced the latest round of cancellations Friday in an update on the progress of its SAVE Plan. More people are becoming eligible for student loan cancellation as they hit 10 years of payments, a new finish line for some loans that’s a decade sooner than what borrowers faced in the past.
Casting a shadow over the cancellations, however, are two new lawsuits challenging the plan's legality. Two groups of Republican-led states, fronted by Kansas and Missouri, recently filed federal suits arguing that the Biden administration overstepped its authority in creating the repayment option.
“From day one of my Administration, I promised to fight to ensure higher education is a ticket to the middle class, not a barrier to opportunity,” President Joe Biden said in a statement. “I will never stop working to cancel student debt — no matter how many times Republican elected officials try to stop us.”
With the latest action, the Education Department has now approved cancellation for about 360,000 borrowers through the new repayment plan, totaling $4.8 billion.
The SAVE Plan is an updated version of a federal repayment plan that has been offered for decades, but with more generous terms.
Congress created the first income-driven repayment option in the 1990s for people struggling to afford payments on standard plans. It capped monthly payments to a percentage of their incomes and canceled any unpaid debt after 25 years. Similar plans were added later, offering cancellation in as little as 20 years.
Arguing that today's borrowers need even more help, the Biden administration merged most of those plans into a single repayment option with more lenient terms.
The SAVE (Saving on a Valuable Education) Plan allows more borrowers to pay nothing until their income rise above certain limits. It also lowers payments more than past plans, eliminates interest growth and cancels unpaid debt in as little as 10 years.
Biden announced the plan in 2022 alongside his broader proposal for a one-time cancellation of up to $20,000 for more than 40 million people. While the one-time cancellation was struck down by the Supreme Court, the SAVE Plan moved forward and initially escaped legal scrutiny.
The repayment plan opened for enrollment last fall, with certain provisions scheduled to be phased in later this year. The faster path to cancellation was among those slated to start this summer, but the Biden administration fast-tracked that benefit early this year, announcing forgiveness for 153,000 borrowers who had hit 10 years of payments.
Almost 8 million Americans have enrolled in the plan, including 4.5 million who pay nothing because they have lower incomes.
In a call with reporters, Education Secretary Miguel Cardona said the plan provides relief and prevents borrowers from falling behind on their loans.
“Now they have some money back in their pockets, instead of a bill that too often competed with basic needs like groceries and health care,” he said.
Under the plan, borrowers who originally borrowed $12,000 or less are eligible for forgiveness after 10 years. Those who took out more than $12,000 can get cancellation but on a longer timeline. For each $1,000 borrowed beyond $12,000, it adds an additional year of payments on top of 10 years.
The Biden administration says it's designed to help those who need it most. Counterintuitively, those with smaller student loan balances tend to struggle more. It’s driven by millions of Americans who take out student loans but don’t finish degrees, leaving them with the downside of debt without the upside of a higher income.
In two separate lawsuits, Republican attorneys general in 18 states are pushing to have the plan tossed and to halt any further cancellation. They say the SAVE Plan goes beyond Biden’s authority and makes it harder for states to recruit employees. They say the plan undermines a separate cancellation program that encourages careers in public service.
It’s unclear what the suits could mean for loans that have already been canceled. A court document filed by Kansas' attorney general says it's “unrealistic to think that any loan forgiveness that occurs during this litigation will ever be clawed back.”
The lawsuits don't directly address the question, and the attorneys general didn't immediately respond to an Associated Press request.
The Education Department says Congress gave the agency power to define the terms of income-driven payment plans in 1993, and that authority has been used in the past.
Along with the repayment plan, Biden is trying again at a one-time student loan cancellation. In a visit to Wisconsin on Monday, he highlighted a proposal to reduce or cancel loans for more than 30 million borrowers in five categories.
It aims to help borrowers with larges sums of unpaid interest, those with older loans, those who attended low-value programs, and those who face other hardships preventing them from repaying student loans. It would also cancel loans for people who are eligible for other forgiveness programs but haven't applied.
The Biden administration says it will accelerate parts of the proposal, with plans to start waiving unpaid interest for millions of borrowers starting this fall. Conservative opponents have threatened to challenge that plan, too.
On Friday the administration also said it's canceling loans for 65,000 borrowers who are enrolled in older income-driven repayment plans and hit the finish line for forgiveness. It also announced cancellation for another 5,000 borrowers through the Public Service Loan Forgiveness program.
Through a variety of programs, the Biden administration says it has now provided loan relief to 4.3 million people, totaling $153 billion.
The Associated Press’ education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.
President Joe Biden speaks during a trilateral meeting with Philippine President Ferdinand Marcos Jr. and Japanese Prime Minister Fumio Kishida in the East Room of the White House in Washington, Thursday, April 11, 2024. (AP Photo/Mark Schiefelbein)
SEOUL, South Korea (AP) — Workers, activists and others in Asian capitals and European cities took to the streets on Wednesday to mark May Day with protests over rising prices and government labor polices and calls for greater labor rights.
May Day, which falls on May 1, is observed in many countries to celebrate workers’ rights. May Day events have also given many an opportunity to air general economic grievances or political demands.
Police in Istanbul detained dozens of people who tried to reach the central Taksim Square in defiance of a government ban on marking Labor Day at the landmark location.
President Recep Tayyip Erdogan’s government has long declared Taksim off-limits for rallies and demonstrations on security grounds, but some political parties and trade unions have vowed to march to the square, which holds symbolic value for labor unions.
In 1977, unidentified gunmen opened fire on a May Day celebration at Taksim, causing a stampede and killing 34 people.
On Wednesday, police erected barricades and sealed off all routes leading to the central Istanbul square. Public transport in the area was also restricted. Only a small group of trade union representatives was permitted to enter the square to lay a wreath at a monument in memory of victims of the 1977 incident.
Riot police apprehended some 30 members of the left-wing People’s Liberation Party who tried to break through the barriers.
In Indonesia, workers voiced anger at a new law they said violates their rights and hurts their welfare, and demanded protections for migrant workers abroad and a minimum wage raise.
About 50,000 workers from Jakarta’s satellite cities of Bogor, Depok, Tangerang and Bekasi were expected to join May Day marches in the capital, said Said Iqbal, the president of the Confederation of Indonesian Trade Unions.
They gathered amid a tight police presence near the National Monument park, waving the colorful flags of labor groups and chanting slogans against the Job Creation Law and loosened outsourcing rules during a march to Jakarta’s main sports stadium, Gelora Bung Karno.
“With the enactment of this law, our future is uncertain because many problems arise in wages, severance pay and the contract system,” said Isbandi Anggono, a protester.
Indonesia’s parliament last year ratified a government regulation that replaces a controversial law on job creation, but critics said it still benefits businesses. The law was intended to cut bureaucracy as part of President Joko Widodo’s efforts to attract more investment to the country, which is Southeast Asia's largest economy.
In Seoul, the South Korean capital, thousands of protesters sang, waved flags and shouted pro-labor slogans at the start of their rally on Wednesday. Organizers said their rally was primarily meant to step up their criticism of what they call anti-labor policies pursued by the conservative government led by President Yoon Suk Yeol.
“In the past two years under the Yoon Suk Yeol government, the lives of our laborers have plunged into despair,” Yang Kyung-soo, leader of the Korean Confederation of Trade Unions, which organized the rally, said in a speech. “We can't overlook the Yoon Suk Yeol government. We'll bring them down from power for ourselves.”
KCTU union members decried Yoon’s December veto of a bill aimed at limiting companies’ rights to seek compensation for damages caused by strikes by labor unions. They also accuse Yoon’s government of handling the 2022 strikes by truckers too aggressively and insulting construction sector workers whom authorities believed were involved in alleged irregular activities.
Since taking office in 2022, Yoon has pushed for labor reforms to support economic growth and job creation. His government has vowed to sternly deal with illegal strikes and demand more transparent accounting records from labor unions.
“The remarkable growth of the Republic of Korea was thanks to the sweat and efforts of our workers. I thank our 28.4 million workers,” Yoon said in a May Day message posted on Facebook. “My government and I will protect the precious value of labor.”
Seoul rally participants later marched through downtown streets. Similar May Day rallies were held in more than 10 locations across South Korea on Wednesday. Police said they had mobilized thousands of officers to maintain order, but there were no immediate reports of violence.
In Japan, more than 10,000 people gathered at Yoyogi park in downtown Tokyo for a May Day event, demanding salary increases that they said could sufficiently set off price increases. During the rally, Masako Obata, the leader of the left-leaning National Confederation of Trade Unions, said that dwindling wages have put many workers in Japan under severe living conditions and widened income disparities.
“On this May Day, we unite with our fellow workers around the world standing up for their rights,” she said, shouting “banzai!" or long life, to all workers.
In the Philippine capital, Manila, hundreds of workers and left-wing activists marched and held a rally in the scorching summer heat to demand wage increases and job security amid soaring food and oil prices.
Riot police stopped the protesting workers from getting close to the presidential palace. Waving red flags and holding up posters that read: “We work to live, not to die” and “Lower prices, increase salaries,” the protesters rallied in the street, where they chanted and delivered speeches about the difficulties faced by Filipino laborers.
Poor drivers joined the protest and called to end a government modernization program they fear would eventually lead to the removal of their dilapidated jeepneys, a main mode of public transport, from Manila’s streets.
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Associated Press journalists Niniek Karmini in Jakarta, Suzan Fraser in Ankara, Turkey, Mari Yamaguchi in Tokyo and VJ Basilio Sepe in Manila contributed to this report.
A man with a flag of a local workers group waits for a May Day rally to start in Tokyo, Wednesday, May 1, 2024. (AP Photo/Hiro Komae)
People clap hands as they hear a speaker during a May Day rally in Tokyo, Wednesday, May 1, 2024. (AP Photo/Hiro Komae)
People walk towards the site of a May Day rally in Tokyo, Wednesday, May 1, 2024. (AP Photo/Hiro Komae)
Masako Obata, president of Japan's National Confederation of Trade Unions, also known as Zenroren, speaks during a May Day rally in Tokyo, Wednesday, May 1, 2024. (AP Photo/Hiro Komae)
People listen to a speaker during a May Day rally in Tokyo, Wednesday, May 1, 2024. (AP Photo/Hiro Komae)
Participants march after a May Day rally in Tokyo, Wednesday, May 1, 2024. (AP Photo/Hiro Komae)
Participants march after a May Day rally in Tokyo, Wednesday, May 1, 2024. (AP Photo/Hiro Komae)
People listen to a speaker during a May Day rally in Tokyo, Wednesday, May 1, 2024. (AP Photo/Hiro Komae)
Participants prepare for a march after a May Day rally in Tokyo, Wednesday, May 1, 2024. (AP Photo/Hiro Komae)
Participants march after a May Day rally in Tokyo, Wednesday, May 1, 2024. (AP Photo/Hiro Komae)
Members of the Korean Confederation of Trade Unions gather to attend a rally on May Day in Seoul, South Korea, Wednesday, May 1, 2024. (AP Photo/Ahn Young-joon)
Members of the Korean Confederation of Trade Unions gather to attend a rally on May Day in Seoul, South Korea, Wednesday, May 1, 2024. (AP Photo/Ahn Young-joon)
Members of the Korean Confederation of Trade Unions gather to attend a rally on May Day in Seoul, South Korea, Wednesday, May 1, 2024. (AP Photo/Ahn Young-joon)
Filipino activists march towards the U.S. Embassy during a protest to mark International Labor Day in Manila, Philippines on Wednesday, May 1, 2024. Hundreds of Filipino workers from various labor groups took to the streets to mark Labor Day and demand a wage increase and job security amid soaring food and oil prices. (AP Photo/Basilio Sepe)
Policemen try to block activists as they tried to march towards the U.S. Embassy during a protest to mark International Labor Day in Manila, Philippines on Wednesday, May 1, 2024. Hundreds of Filipino workers from various labor groups took to the streets to mark Labor Day and demand a wage increase and job security amid soaring food and oil prices. (AP Photo/Basilio Sepe)
Filipino workers carry streamers and posters during a protest to mark International Labor Day near the presidential palace in Manila, Philippines on Wednesday, May 1, 2024. Hundreds of Filipino workers from various labor groups took to the streets to mark Labor Day and demand a wage increase and job security amid soaring food and oil prices. (AP Photo/Basilio Sepe)
A man carries a poster during a protest to mark International Labor Day near the presidential palace in Manila, Philippines on Wednesday, May 1, 2024. Hundreds of Filipino workers from various labor groups took to the streets to mark Labor Day and demand a wage increase and job security amid soaring food and oil prices. (AP Photo/Basilio Sepe)
Filipino workers carry streamers and posters during a protest to mark International Labor Day near the presidential palace in Manila, Philippines on Wednesday, May 1, 2024. Hundreds of Filipino workers from various labor groups took to the streets to mark Labor Day and demand a wage increase and job security amid soaring food and oil prices. (AP Photo/Basilio Sepe)
