Student loan forgiveness to give millions of Americans a stimulus payment

During the pandemic, in 2020 and 2021, the US government issued three rounds of stimulus payments totaling more than $930 billion to support individuals and families facing financial hardship.

More than 25 million Americans could soon receive a similar gift from the government — maybe call it a backdoor stimulus — in the form of student loan debt forgiveness.

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The covid payments were part of broader relief efforts, including increased unemployment benefits and small business loans, aimed at easing the economic impact of the pandemic on households and businesses.

The payments provided important financial support, helping millions of Americans pay for vital costs such as rent, food and medical bills during the economic crisis that accompanied the health emergency.

Many people who owe money on student loans have been waiting for comparable assistance in the form of forgiveness of that debt since President Biden took office in 2021.

They were told help was on the way, only to see it challenged in court. And those lawsuits led to several rulings to stop the program.

Even so, the Biden administration continued to seek legal alternatives to student loan forgiveness. And it appears to have kept the program alive once again, thanks to a move by a federal judge.

Student loan forgiveness survives a court challenge

U.S. District Judge J. Randal Hall, who serves in the Southern District of Georgia, allowed the restraining order on President Joe Biden’s student loan forgiveness plan to expire on October 1. This decision means the plan can go ahead.

The restraining order was originally introduced because several states argued that the student loan forgiveness plan was illegal and would cause them harm. However, Judge Hall ruled that Georgia did not provide sufficient evidence to show evidence of that prejudice.

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That made Georgia an inappropriate location for the case to be argued, Hall ruled.

Biden’s original student debt relief plan was intended to allow the federal government to forgive up to $20,000 in student loans for about 40 million beneficiaries.

The new plan — the one involved in the lawsuit that Judge Hall allowed the restraining order to expire — was announced last April.

A man is seen deciding to use a loan to deal with a financial challenge. Action by a federal judge recently made student loan forgiveness more likely, once again, for many Americans.

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The new student loan forgiveness plan affects millions of Americans

At the time, the White House announced details of its new alternative plan to reduce student debt.

“In total, these plans would completely eliminate accrued interest for 23 million borrowers, write off the entire amount of student debt for more than 4 million borrowers, and provide more than 10 million borrowers with at least $5,000 in debt relief or more,” White said. The House statement said.

Related: Biden White House wipes out another $1.2 billion in student debt

The statement also explained some of the difficulties student loan borrowers have faced over time and discussed the scope of the administration’s proposed remedy.

Millions of borrowers who could have been helped by these plans continued to see their balances grow due to accrued interest despite making monthly payments. Many have also had this unpaid interest compounded, meaning it is added to their principal balance and borrowers are now paying interest on that larger amount. The Administration’s plan would forgive interest balances accrued to date for 25 million borrowers, with 23 million likely to have their entire balance increase forgiven.

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