Story at a glance
- The Biden administration so far has discharged around $16 billion in loans from more than 680,000 borrowers.
- The Education Department approved $2 billion in borrower defense claims, discharged $5.8 billion for those who have a total and permanent disability and expanded loan forgiveness for public service workers.
- Prominent lawmakers have regularly advocated for up to $50,000 of debt cancellation per borrower, and Biden has signaled he’s willing to eliminate at least $10,000
The Biden administration signaled late last week there may be another pause in student loan repayments currently scheduled to resume May 1, with White House chief of staff Ron Klain saying the president will consider what to do about student debt before deciding on another deferment.
Around 45 million borrowers collectively owe $1.7 trillion in student loans, and data shows the average borrower holds more than $36,000 in debt.
Prominent lawmakers, including Senate Majority Leader Charles Schumer (D-N.Y.), have regularly pushed for up to $50,000 of debt cancellation per borrower. Meanwhile, President Biden indicated early in his presidency he is open to eliminating at least $10,000.
Biden’s Education Department so far has discharged around $16 billion in loans for more than 680,000 borrowers in part by improving the Public Service Loan Forgiveness program, removing barriers for borrowers with permanent disabilities and eliminating billions through borrower defense claims.
The moves by the Biden administration haven’t come without pushback. Sen. John Thune (R-S.D.) called it “fundamentally unfair” and said blanket loan forgiveness is not the answer.
Here’s a breakdown of the steps the Biden administration has taken to address loan repayments and debt forgiveness in its first 15 months.
Loans paused throughout Biden’s presidency
Biden’s chief of staff, Ron Klain, touted the president’s record on student loans March 3, noting Biden is the “only president in history where no one’s paid on their student loans for the entirety of his presidency.” Indeed, the administration has continually renewed the pause in payments, which began in March 2020, each time they’ve been on the verge of restarting.
Former President Trump first introduced the student loan moratorium at the beginning of the coronavirus pandemic.
More than 200 advocacy organizations and unions urged President Biden in a letter on Monday to pause student loan repayments for a fourth time. The 210 groups, led by the Student Borrower Protection Center, argued payments should not resume until the president delivers on promises he made to borrowers “to fix the broken student loan system and cancel a substantial amount of federal student debt.”
“Your administration now has a once-in-a-generation chance to repair the damage caused by policy failures at the federal and state level and decades of government mismanagement and industry abuses — an opportunity and an obligation that must be fulfilled before any action is taken to resume monthly student loan payments,” they wrote.
Nearly $2 billion in student debt eliminated via borrower defense claims
The administration has approved nearly $2 billion in relief for more than 107,000 borrowers via borrower defense claims — a system in place to forgive borrowers defrauded by their schools. Recently, nearly 16,000 borrowers had $415 million in student loans discharged after an Education Department review of four for-profit institutions.
An investigation determined that DeVry University, ITT Technical Institute, Westwood College and the Minnesota School of Business each made misleading characterizations regarding the success of students who moved through their respective programs. The Education Department noted the approved borrower defense claims against DeVry were the first against a currently operating institution.
“Students count on their colleges to be truthful. Unfortunately, today’s findings show too many instances in which students were misled into loans at institutions or programs that could not deliver what they’d promised,” said U.S. Secretary of Education Miguel Cardona in a statement.
Borrower defense claims were previously approved for former students at Corinthian Colleges, Marinello Schools of Beauty and the Court Reporting Institute among others.
Total and Permanent Disability Discharge
An updated Education Department policy announced in August discharged at least $5.8 billion in student loans of more than 323,000 borrowers who have a total and permanent disability. The policy shift allowed borrowers with a disability to be identified through a data match with the Social Security Administration. Borrowers were previously required to fill out an application for debt relief.
At the same time, the administration extended a policy that released borrowers experiencing a disability from verifying their incomes. The department announced it is also seeking an end to a three-year monitoring period.
Loan forgiveness program expanded for public service workers
Under the Biden administration, the Education Department overhauled the Public Service Loan Forgiveness (PSLF) Program, notorious for being mismanaged and having overly complex eligibility requirements. It targets public service workers, like teachers, nurses and firefighters who can apply for a PSLF waiver to have their student loans forgiven after 10 years of public service while working for an eligible employer. Only federal direct loans were eligible.
The Biden administration has tried to reform the program, allowing all payments by qualifying student borrowers to count towards PSLF, regardless of the loan type or payment plan. Military service members and federal employees also began receiving credit towards PSLF automatically through federal data matches.
The Education Department also began reviewing previously denied PSLF applications for errors and gave borrowers the opportunity to have their PSLF determinations reconsidered.
All in all, the Education Department expected its policy changes to result in 22,000 borrowers who were previously deemed ineligible for PSLF to become immediately eligible for $1.74 billion in loan forgiveness — without any further action needed on their part.
An additional 27,000 borrowers would potentially qualify for PSLF for an additional $2.82 billion in forgiveness if they were to certify additional periods of employment.
“Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness. The system has not delivered on that promise to date, but that is about to change for many borrowers who have served their communities and their country,” said Cardona in a statement.
Where student loan forgiveness stands now
As the White House explores what legal authority it has to forgive student loan debt, the pressure to act continues to build from lawmakers, advocates and students.
NAACP President and CEO Derrick Johnson blasted the White House in December after Biden extended the pause on federal student loan payments for the third time since assuming office, writing in a tweet, “If you can afford to pause student loan payments over and over again, you can afford to cancel it.”
In February, progressive lawmakers, including Senate Majority Leader Charles Schumer (D-N.Y.), Sen. Elizabeth Warren (D-Mass.) and Rep. Ayanna Pressley (D-Mass.) reintroduced a bicameral resolution calling on the president to cancel up to $50,000 for borrowers holding federal student loan debt.
The resolution urges Biden to use his existing executive authority under the Higher Education Act to cancel debt and ensure there’s no tax liability for borrowers. Biden said during his 2020 presidential campaign the U.S. should forgive a minimum of $10,000 in student debt, and his administration has periodically signaled he’s still willing to honor that pledge.
“By cancelling up to $50,000 in federal student loan debt for borrowers, President Biden can take the single most effective executive action available to provide a massive stimulus to our economy, help narrow the racial wealth gap, and lift this impossible burden off of tens of millions of families,” Warren said in a statement at the time.
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