Less than a year after the U.S. Supreme Court blocked President Joe Biden’s student loan forgiveness, his administration has adopted a gradual approach to forgiving billions of dollars in debt for millions of borrowers.
The president’s original plan aimed to eliminate $10,000 to $20,000 of student debt for borrowers who received Pell Grants, as long as they earned less than $125,000 per year. A significant number of individuals enrolled for debt relief, but the Supreme Court ultimately rejected the proposal in June.
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Biden and the Department of Education have recently unveiled more specific debt cancellations for borrowers who meet specific criteria. Numerous individuals who have been diligently repaying their student loans for a decade or longer have had their debt completely forgiven.
According to the White House, their efforts have successfully provided debt relief to 4.3 million borrowers, totaling $153 billion as of April 12.
Fixing Broken Programs
According to borrower advocates, the most effective kinds of relief were public service loan forgiveness and income-driven repayment plans.
We established the PSLF program in 2007 and planned to start operations in 2017. It would allow borrowers who made 120 payments while working in the public sector to have the remaining balance forgiven.
Spencer Dixon, senior policy advisor at the Student Debt Crisis Center, told UPI that the “program was so poorly managed” during President Donald Trump’s administration that “only 7,000 people received relief under the program.”
“Under Biden, so far, we’ve seen more than 100 times as many people benefit from the program,” Dixon went on to say.
In October 2022, the Department of Education announced permanent changes to the PSLF program, including the ability for borrowers working in public service fields to receive credit for late, partial, or lump sum payments, as well as credit for months of deferment or forbearance, including those related to military service, economic hardship, or cancer treatment.
Following a succession of debt discharges, the administration announced that it has awarded $62.8 billion in forgiveness to nearly 876,000 borrowers through the PSLF program.
As of April 12, the Education Department reported that more than 996,000 borrowers had obtained relief from new fixes to IDR programs, with the administration granting $49.2 billion in debt relief.
The first relief statement came on July 14, following the Supreme Court’s decision to prohibit Biden’s broader debt elimination scheme. The Department of Education announced that it would notify over 804,000 borrowers about their eligibility for a total of $39 billion in loan forgiveness.
This set of cancellations occurred automatically. Borrowers have made 240–300 monthly payments, which equates to 20–25 years on an IDR plan.
Furthermore, in response to the Supreme Court’s rejection of his broader student debt relief plan, Biden introduced the Savings on a Valuable Education Plan, or SAVE, which provides automatic relief to borrowers who have been making payments for more than ten years and originally borrowed $12,000 or less.
In February, SAVE borrowers began obtaining loan forgiveness earlier than the originally scheduled July deadline, with $1.2 billion forgiven, affecting roughly 153,000 people. The Education Department announced that they will forgive more borrowers once they meet the 10-year payback threshold. Approximately 7.5 million people have signed up for the SAVE repayment plan.
The Education Department reported this month that the program has forgiven $3.6 billion in loans for nearly 206,800 borrowers.
‘This is transformational’
According to Dixon, repayment flexibility and debt reduction have benefited nonprofit and government workers the most. Low- and middle-income families, as well as black and Latino families, will be disproportionately affected.
The Biden administration has stressed debt reduction for public employees. Days after announcing the early SAVE plan forgiveness in January, the Biden administration canceled $5 billion in benefits for 74,000 public employees. Teachers, nurses, firefighters, and other public employees benefited.
Approximately 30,000 of these borrowers have been repaying their education debts for 20 years. The rest had been paying for ten years.
Debt relief has been critical for educators, whether they are just beginning their professions or approaching retirement. Becky Pringle, president of the National Education Association, told UPI that the impact on educators was nearly immediate.
“The early-career educators who are taking two or three jobs and living with their colleagues in an apartment—all of that is real,” Pringle went on to say. “When that changes for them, they tell us about how it not only encourages them to stay in the profession but that they can live their lives and start their families.”
According to Pringle, debt relief opponents frequently mischaracterize borrowers as not paying their loans. In most cases, those who have received relief have been paying off their debts for ten years or more. Some who had paid for a decade or more had balances that exceeded their original loan.
She told me, “They’ve been paying it, but the structure prevents them from getting out.” “We discovered that more than 25% of educators over the age of 61 had yet to repay their college loans. Approximately 35% were carrying more than $45,000 in debt.
These financial circumstances have caused some teachers to put off retiring or to believe that
“That’s unbelievable and unacceptable,” Pringle remarked.
Pringle and Amy Czulada, outreach and advocacy manager for the Student Borrower Protection Center, told UPI that student debt has forced many people to put off raising a family or buying a home.
“We were surprised to find out how many of our members were delaying starting families or buying houses because they were laboring under this debt,” Mr. Pringle said. ”
Czulada believes that with relief, those people will be able to engage in the economy in ways they were before unable to do.
“It’s been a really exciting time to be doing this work,” she remarked. “This is the first time we’ve seen a decrease in student debt. It has grown significantly over the last decade. The tales we receive from people about what debt cancellation means to them are quite encouraging. They have more freedom to pursue long-held ambitions.” This is transformative.”
‘Plan B’
While the Biden administration has launched several initiatives to widen debt relief, it is also attempting to implement a bigger plan than originally envisaged. Last Monday, it submitted a notice of proposal to forgive certain student debts under the Higher Education Act.
According to a White House statement, “If implemented, the plans would provide debt relief to over 30 million Americans when combined with actions the Biden-Harris Administration has already taken to cancel student debt over the past three years.”
“This plan for broad-based forgiveness is more targeted,” Dixon went on to say. “A reasonable person could argue that it’s a reaction to the manner in which the first plan faced opposition.”
Czulada explains that this new concept aims to bridge some of the gaps left by past relief measures. It would also fix more programs that were not working properly.
The idea would impose a number of new regulations that would reduce the debt load for borrowers who have been making payments, have faced hardship, or may have qualified for relief without realizing it.
If the borrower falls within or below specific income limits, a portion of the debt, or even the entire amount, may be waived if it exceeds the loan amount when it was placed into repayment. Borrowers who were eligible for schemes like the IDR plan may have their outstanding balance forgiven, even if they do not participate.
However, Biden’s piecemeal debt forgiveness schemes have also received criticism.
Kris Kobach, Kansas’ Attorney General, has been one of the most vocal opponents of eradicating student debt. Last month, he formed a coalition of 11 states to sue the Biden administration over its efforts to cancel student debt. Alabama, Alaska, Idaho, Iowa, Louisiana, Montana, Nebraska, South Carolina, Texas, and Utah have joined the lawsuit.
Kobach claims that Biden’s proposals contradicted the Supreme Court’s decision and circumvented Congress.
