Biden's Total Student Debt Relief Surpasses $183 Billion

President Joe Biden's administration has taken significant strides in addressing the student debt crisis, with the total amount of debt relief surpassing $183 billion. The latest round of relief, announced on January 14, 2025, forgave an additional 150,000 borrowers, bringing the total number of Americans who have had their student debt cancelled by the administration to over 5 million. This article explores the impact of Biden's student debt relief initiatives on the economy, borrowers' financial security and mental health, and homeownership and entrepreneurship rates.



Economic Impact of Student Debt Relief

Biden's student debt relief initiatives have the potential to positively impact the overall economy in several ways. First, the relief can boost consumption by allowing borrowers to increase their spending on goods and services, directly contributing to economic growth. According to a study by the Roosevelt Institute, student debt cancellation could boost consumption in the short term by billions of dollars.

Second, the relief can alleviate the mental and financial stress associated with student debt, allowing borrowers to make better decisions about their future. A survey by the Consumer Financial Protection Bureau (CFPB) found that nearly 61% of borrowers who received debt relief reported positive life changes, such as being able to pursue important life decisions or allocate more funds towards basic necessities.

Third, with less debt to worry about, borrowers may be more likely to take career risks, start businesses, or purchase homes. A study by the Ewing Marion Kauffman Foundation found that the rise in student loan debt has contributed to a decline in the number of new entrepreneurs aged 20 to 34. Additionally, estimates indicate that every $1,000 in student loan debt reduces the homeownership rate by about 1.8% for those who attended public four-year institutions.

Finally, by making college costs more affordable for current borrowers and future generations, the SAVE plan can encourage more people to pursue higher education. This can lead to a more skilled workforce and contribute to the broader economy. CEA simulations show that, under SAVE, an average borrower with a bachelor's degree could save $20,000 in loan payments, while a borrower with an associate degree could see nearly 90 percent savings compared to the standard loan repayment plan.

Long-term Effects on Borrowers' Financial Security and Mental Health

The potential long-term effects on borrowers' financial security and mental health are significant. Student loan debt can limit borrowers' ability to save for retirement, qualify for a mortgage, and start businesses. High student loan balances can also hinder entrepreneurship by increasing the debt-to-income (DTI) ratio, making it harder to get business loans and invest in new ventures.

The stress and anxiety associated with student loan debt can be detrimental to mental health. A study by the American Psychological Association found that money is the top source of stress for Americans, with student loans being a significant contributor. The uncertainty and fear of defaulting on loans can also negatively impact mental health, leading to increased anxiety and depression.

Impact on Homeownership and Entrepreneurship Rates

Biden's student debt relief initiatives can have significant impacts on homeownership and entrepreneurship rates. By forgiving student debt, the Administration's relief efforts can help borrowers overcome the barrier of high debt levels and increase their chances of becoming homeowners. The SAVE plan can also help current borrowers and future generations save for a down payment and qualify for a mortgage more easily.

High levels of student loan debt can deter individuals from starting their own businesses, as they may feel the need to secure a stable income to repay their loans. By reducing the burden of student debt, the Administration's relief efforts can encourage more people to take career risks and become entrepreneurs. The SAVE plan can also make it more affordable for current borrowers and future generations to pursue higher education, which can lead to better job prospects and increased confidence in starting a business.

In conclusion, Biden's student debt relief initiatives have the potential to positively impact the overall economy, improve borrowers' financial security and mental health, and increase homeownership and entrepreneurship rates. By addressing the student debt crisis, the Administration is helping to create a more prosperous and equitable future for millions of Americans.