Joe Biden at his office. File / photo used for illustrative purpose.

The Education Department announced the latest round of cancellations on Wednesday, saying it will erase $7.7 billion in federal student loans. With the latest action, the administration said it has cancelled $167 billion in student debt for nearly five million Americans through several programmes.

"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. 

The latest relief will go to borrowers in three categories who hit certain milestones that make them eligible for cancellation. It will go to 54,000 borrowers who are enrolled in Biden's new income-driven repayment plan, along with 39,000 enrolled in earlier income-driven plans, and about 67,000 who are eligible through the Public Service Loan Forgiveness programme.

Biden's new payment plan, known as the SAVE Plan, offers a faster path to forgiveness than earlier versions. More people are now becoming eligible for loan cancellation as they hit 10 years of payments, a new finish line that's a decade sooner than what borrowers faced in the past.

The Biden administration has continued cancelling loans through existing avenues while it also pushes for a new, one-time cancellation that would provide relief to more than 30 million borrowers in five categories.

Biden's new plan aims to help borrowers with large sums of unpaid interest, those with older loans, those who attended low-value college programmes, and those who face other hardships preventing them from repaying student loans. It would also cancel loans for people who are eligible through other programmes but have not applied.

The proposal is going through a lengthy rulemaking process, but the administration said it will accelerate certain provisions, with plans to start waiving unpaid interest for millions of borrowers starting this fall.

WAM