Washington — President Joe Biden’s plans to deliver widespread student debt relief were dealt a serious blow last year when the Supreme Court struck down his one-time student loan forgiveness program. But he has still managed to cancel more federal student loan debt than any other president.
As the November election gets closer, Biden’s team is eager to tout what he’s done to address student loan debt – with the administration recently sending congratulatory emails to 153,000 debt-relief recipients – even if his actions fall short of some Democrats’ expectations.
Since taking office, Biden’s administration has approved the cancellation of about $138 billion in federal student loans – wiping out debts for about 3.9 million borrowers – by using a number of existing programs that aim to offer debt relief for certain groups of struggling borrowers.
The amount Biden has canceled is equal to nearly 9% of the $1.6 trillion of federal student loan debt currently held by borrowers.
It’s about one-third of the amount of student loan debt that would have been canceled by his broad forgiveness program. About $430 billion would have been forgiven last year if the Supreme Court had allowed that program to take effect.
How Biden is canceling student debt despite the Supreme Court ruling
The Supreme Court ruled that the executive branch does not have the authority to implement Biden’s broad forgiveness program, which would have canceled up to $20,000 for borrowers who make less than $125,000 a year.
The one-time cancellation program would have benefited millions of people, but it drew some criticism because it would not have helped future borrowers or addressed the larger issue of the rising cost of college.
What Biden has been doing – before and after the Supreme Court ruling – is using existing student loan forgiveness programs to deliver relief to certain groups of borrowers, like public-sector workers (through the Public Service Loan Forgiveness program) and borrowers who were defrauded by their college (through the borrower defense to repayment program). His administration also made discharges for borrowers who are totally and permanently disabled.
None of these programs expire, meaning they will help qualifying borrowers now and in the future. In some cases, Biden’s administration has expanded the reach of these programs, making more borrowers eligible.
And in other cases, it has made an effort to correct past administrative errors made to borrowers’ student loan accounts by conducting a one-time recount of borrowers’ past payments. This effort helps make sure people receive the loan forgiveness they may already qualify for by having made at least 20 years of payments in an income-driven plan, which calculates monthly payment amounts based on a borrower’s income and family size, rather than the amount owed. The recount is expected to be completed by July.
Many of the Biden administration’s actions have helped chip away at a backlog of student loan forgiveness applications left over from the Trump administration, which tried to limit some debt-relief programs and slowed processing of applications.
Last year, the administration created a new income-driven repayment plan. Known as SAVE, the new plan offers the most generous terms for low-income borrowers. Those who originally borrowed $12,000 or less will see their remaining debt canceled after making payments for at least 10 years.
Will Biden get political credit?
It remains to be seen if Biden will get a political boost from his student debt cancellation efforts in November’s election.
In a Reuters/Ipsos poll conducted in January, 46% of US adults said Biden has the “best approach” to lowering student debt burdens, compared with 22% who said Donald Trump does.
But Biden’s actions have fallen short of what other Democratic leaders – like Senate Majority Leader Chuck Schumer and Massachusetts Sen. Elizabeth Warren – repeatedly called for when he came to office. They wanted the president to cancel $50,000 of student loan debt per borrower – an amount Biden argued was too high.
Still, the Biden administration is working on implementing another path toward a broad student loan forgiveness program, this time relying on a different legal authority in hopes that this attempt holds up in court. This proposal is currently making its way through a lengthy rulemaking process and has yet to be finalized.
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