Manuel Balce Ceneta/AP Photo
President Joe Biden speaks about student debt relief at Culver City Julian Dixon Library in Culver City, California, February 21, 2024.
Basic competence in government makes too few headlines. But to four million Americans, it was exactly what they needed to escape a lifetime of financial burdens. Any president could have done it, but Joe Biden actually got it done.
On Wednesday, Biden spoke at a Culver City, California, library about how the new round of student debt relief, which brings total loan forgiveness during his presidency to $137.8 billion for 3.9 million borrowers, came together. In his remarks, Biden noted that he tried to enact a $430 billion mass cancellation program for tens of millions of borrowers in 2022. “But my MAGA Republican friends in the Congress, elected officials, and special interests stepped in and sued us. And the Supreme Court blocked it,” Biden explained. “That didn’t stop me. I announced we were going to pursue alternative paths for student debt relief for as many borrowers as possible.”
This line in particular was met with derision, as conservatives fulminated about “Nixonian” processes to defy legal rulings and boost public benefits in an election year. They wrongly assume that these cancellations were undertaken in direct response to the Supreme Court. To be fair, Biden is confusing the issue himself, by failing to explain clearly the truth of the matter: His Education Department is just doing its job.
None of the programs used to cancel student debt are newly created by the Biden administration. Biden’s Education Department simply fixed existing programs that weren’t working to give borrowers relief that they deserved. These are borrowers who were defrauded, became disabled, or signed up for a repayment program that guaranteed debt relief, under long-standing U.S. laws and federal rulemaking. These people saw those promises of help broken for decades, increasing their anger until the political system finally acted.
The fact that the low-hanging fruit of student debt forgiveness adds up to hundreds of billions of dollars highlights how broken the system was before, and how absurd this system of higher-education financing and the numbers thrown around in conjunction with it still is.
THE DEBT RELIEF INITIATED UNDER the Biden administration falls into five buckets. First, the Education Department has forgiven $22.5 billion to 1.3 million borrowers who saw their schools close, or who were promised a useful diploma for obtaining employment that proved to be worthless. An example of this is the wholesale forgiveness of $5.8 billion for students who attended for-profit Corinthian Colleges, a now-bankrupt institution that has been found guilty of misrepresentation and predatory lending on multiple occasions.
Forgiving loans to student borrowers whose colleges defraud them, or when their schools close, is a requirement under the Higher Education Act of 1965. Previous administrations worked actively to delay or outright deny these requests, including the Obama and Trump administrations. The latter, under Education Secretary Betsy DeVos, tried to shortchange defrauded students explicitly with only partial relief.
Even today, conservatives are attempting to block this fully legal imperative. The right-wing Fifth Circuit Court of Appeals put on hold the administration’s latest regulations for borrower defense and closed school discharges. But earlier regulations put in place have not been challenged and are still active, and the Education Department continues to work through borrower discharge applications using those rules.
The next batch of forgiveness is $11.7 billion for 513,000 borrowers who became “totally and permanently disabled” after taking out student loans. The Total and Permanent Disability Discharge program has been in place since 1965, but many disabled borrowers had no idea they were eligible, and borrowers had to affirmatively apply. Biden’s Education Department put together a data match with the Social Security Administration so that debt relief could be enacted automatically. Using a 1965 law more efficiently so people with a disability who cannot work are not on the hook for student loans they cannot pay is hardly some Nixonian plot to skirt the law.
The fact that the low-hanging fruit of student debt forgiveness adds up to hundreds of billions of dollars highlights how broken the system was before.
About $56.7 billion in debt relief has gone to 793,400 borrowers who signed up for the Public Service Loan Forgiveness (PSLF) program. Initiated by Congress and signed by George W. Bush in 2007, this repayment program allows borrowers who go to work for government organizations or agencies (including teachers or public defenders paid for by the state) or nonprofit organizations to get their loans forgiven after making ten years of on-time monthly payments.
This was supposed to be implemented in 2017, when the first batch of borrowers completed ten years of payments. But during the Trump administration, only 7,000 individuals total ever received forgiveness, as the program was marred by servicer errors and reluctance from DeVos’s Education Department. (Trump budgets and Republican-sponsored legislation would have eliminated PSLF entirely.) The Biden administration has increased the pace more than 100-fold, though there are probably several hundred thousand more borrowers who fulfilled their obligations under PSLF, a congressionally authorized program in place for 17 years that has not been challenged, but haven’t yet seen relief.
Another 930,500 borrowers have received $45.7 billion in debt forgiveness simply by getting what they were entitled to under a separate repayment program known as income-driven repayment (IDR). Under the old terms of that program, which started with a pilot program in 1992, after 20 to 25 years of repayment (depending on the loan), outstanding debt was supposed to be forgiven. But once again, borrowers experienced administrative failures and servicer errors. The Biden Education Department fixed this, and got this cohort of nearly one million borrowers debt forgiveness.
Finally, we have this week’s announcement, the only one that relates to a program Biden at least had a hand in. Last year, the administration revised the three-decade-old income-driven repayment program, naming their version Saving on a Valuable Education (SAVE). Biden’s version is far more generous than past iterations (so much so that Republicans in Congress have tried to repeal it), but what’s important is that borrowers who initially borrowed $12,000 or less only have to pay in for ten years rather than 20 to get forgiveness. What was announced is that 153,000 borrowers who meet this standard and have already paid for ten years will have their balances automatically forgiven, for a total of $1.2 billion. The White House accomplished this six months ahead of schedule.
SO THE REASON THAT 3.9 MILLION borrowers have received loan forgiveness is that the government stopped breaking promises made to them. Whatever your views on the student loan program, the fact is that when the government outlines steps people can take to get a benefit, they should probably honor it. Amazingly, Biden’s was the first administration, really, to actually follow through.
Now, Biden is also trying to institute a Plan B to deliver broader debt cancellation after the Supreme Court blocked his first attempt. He is using something called the negotiated rulemaking process to set out the terms by which, again under the Higher Education Act of 1965, student borrowers can receive debt relief.
Last week, the Education Department released a revised proposal for this debt cancellation program. It could include borrowers who owe more than they originally borrowed, students of poorly accredited colleges, and most recently borrowers experiencing financial hardship, defined as those with “unreasonable” payments relative to income, those with high expenses for child care or health care, or those with other debt obligations that compound the inability to pay. (Student debt is often a factor in financial hardship, according to economic and legal surveys.)
This could sum out to millions of Americans being eligible for debt relief. And it will likely be subject to another right-wing lawsuit from those who don’t want to see mass cancellation. But none of that would roll back the $138 billion of debt relief already obtained from simply making programs work.
It’s incredible that such an enormous sum was withheld from student borrowers for so long. It’s an indictment of presidents over the past half-century that their administrations allowed this higher-education finance bubble to balloon and then refused to honor the programs they themselves set up to lighten the burden. And it reflects well on Biden that he has reversed that, not to mention the student debt activists who tirelessly pushed for this to happen.
That said, while the Federal Reserve estimates that outstanding student loan debt has actually fallen from its overall peak over the past year, federal student loan debt has gone up by more than $300 billion during the Biden presidency. The program itself continues to envelop students in debt that they cannot afford, leading to a lead weight on young people starting their lives and on the broader economy.
The robust SAVE program, with its lower monthly payments and generous debt forgiveness, might offer a path to fixing that. But that just means that the numbers thrown around about student debt are creative fictions, and, in many senses, the government is simply subsidizing higher education. I’d argue that they should as part of a larger new approach that would demand that colleges lower tuition costs, remove administrative bloat, and direct budgetary resources to actually teaching kids. That way, the government gets good value and students get a good education, both of which will pay off for the country.
