Despite the Supreme Court’s rejection of President Joe Biden’s flagship student loan forgiveness program in late June, his administration has managed to eliminate more than $48 billion in debt since that time.
These cancellations have occurred through existing federal student loan forgiveness initiatives, which are limited to specific groups of borrowers. These include public-sector workers, individuals defrauded by for-profit colleges, and borrowers who have diligently paid for at least 20 years.
It’s important to note that these programs are distinct from the rejected forgiveness plan, which aimed to cancel about $430 billion of the $1.6 trillion in outstanding federal student loan debt all at once.
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Since taking office, the Biden administration has been granting student loan forgiveness through these existing programs on an ongoing basis, discharging a total of $127 billion for nearly 3.6 million individuals as of now.
This achievement marks a historical precedent, with the current administration surpassing all previous administrations in student loan forgiveness. This is partially due to the Biden administration’s efforts to temporarily expand certain debt relief programs and rectify past administrative errors related to borrowers’ student loan accounts. This stands in stark contrast to the previous administration, which attempted to restrict some of these forgiveness programs and slowed down the processing of certain applications.
However, Biden’s debt relief actions have faced criticism from his Republican opponents, who argue that some of these measures are illegal attempts to sidestep the Supreme Court’s ruling.
A significant portion of the debt cancellations, nearly $42 billion, was directed towards almost 855,000 borrowers enrolled in income-driven repayment plans. This was primarily due to the Biden administration’s initiative to review borrowers’ past payments and rectify what officials termed “past administrative failures.”
Income-driven repayment plans, available in some form since 1993, enable borrowers to qualify for debt discharges after making qualifying payments for at least 20 years. These plans reduce monthly payments by linking them to a borrower’s income and family size. However, the Department of Education has historically struggled to track these payments accurately.
Last year, the US Government Accountability Office recommended that the department take more proactive measures to ensure eligible borrowers receive the forgiveness they are entitled to. This was after it was discovered that there were thousands of loans still in repayment that could have already been eligible for forgiveness.
The Biden administration announced a one-time account adjustment effort in April 2022, but the cancellations did not commence until this year. This move was met with skepticism about its legality, particularly since it followed closely after the Supreme Court’s decision against Biden’s main loan forgiveness program.
Biden’s administration is currently facing legal challenges over these account adjustments. The New Civil Liberties Alliance, on behalf of conservative groups Cato Institute and the Mackinac Center for Public Policy, filed a lawsuit against these adjustments. While the lawsuit’s outcome is uncertain, experts suggest it’s unlikely to reverse the debt relief that has already occurred.
In addition to these efforts, Biden’s administration has also canceled $22.5 billion in student loan debt for more than 1.3 million borrowers through an existing program called borrower defense to repayment. This program offers debt relief to individuals who were defrauded by their college. Recently, $37 million was canceled for over 1,200 borrowers who attended the University of Phoenix due to misleading information about job prospects.
Furthermore, the Biden administration has streamlined the process for disabled borrowers to receive the debt relief they are entitled to. Since 2021, nearly 513,000 borrowers with total and permanent disabilities have received $11.7 billion in student loan forgiveness. The administration eliminated the requirement for borrowers to provide extensive documentation and instead enabled automatic discharges for disabled borrowers identified through administrative data matching with the Social Security Administration. These changes aimed to reduce bureaucracy and facilitate quicker access to debt relief for disabled individuals.
Overall, the Biden administration’s approach to student loan forgiveness, despite facing legal challenges, has significantly impacted borrowers, providing substantial relief to those burdened by student loan debt.
