The Department of Education said Wednesday that it has approved the cancellation of nearly $5 billion more in federal student loan debt, bringing the total amount of student debt relief provided under the Biden administration to $132 billion for more than 3.6 million borrowers.
Though the Supreme Court struck down President Joe Biden’s signature student loan forgiveness program, which promised up to $20,000 in debt relief for low- and middle-income borrowers, the administration has continued to find other ways to provide debt relief.
“We are continuing to pursue an alternative path to deliver student debt relief to as many borrowers as possible as quickly as possible,” Biden said in a statement Wednesday.
The cancellations have come through existing federal student loan forgiveness programs, which are limited to specific categories of borrowers, such as public-sector workers, people defrauded by for-profit colleges and borrowers who have paid for at least 20 years.
Those borrowers who are eligible for relief under Wednesday’s announcement qualify in one of two ways: either under the Public Service Loan Forgiveness program, which wipes away remaining student loan debt after qualifying public-sector workers make 10 years’ worth of monthly payments; or because they have made at least 20 years of qualifying payments in an income-driven repayment program but didn’t previously get credit for all of their student loan payments.
Most of these borrowers were notified in November that their outstanding federal student loan debt would be canceled and they can expect to see the changes made to their accounts in the coming weeks.
The Biden administration has been granting student loan forgiveness through these existing programs on a rolling basis since coming into office. To date, it has granted more student loan forgiveness than any other administration – in part due to efforts to temporarily expand some debt relief programs and to correct past administrative errors made to borrowers’ student loan accounts.
“The latest discharges are a result of this administration’s relentless efforts to fix our country’s broken student loan system and get hard-earned debt relief into the hands of eligible borrowers,” Education Secretary Miguel Cardona said on a call with reporters.
Recounting past payments and fixing errors
Many borrowers are seeing debt relief thanks to a one-time recount of their past payments, an effort undertaken by the Biden administration to fix what officials have called “past administrative failures.”
Borrowers enrolled in income-driven repayment plans, which have been available in some form since 1993, are generally eligible for debt discharges after making qualifying payments for at least 20 years. The plans lower monthly payments by tying them to a borrower’s income and family size.
But the Department of Education has historically had trouble tracking borrowers’ payments.
Last year, the US Government Accountability Office recommended that the department do more to ensure that borrowers receive the forgiveness they are entitled to, after it found that there were thousands of loans still in repayment that could already be eligible for forgiveness.
The one-time account adjustment effort was first announced by the Biden administration in April 2022 and the cancellations did not begin until this year. The department is expected to announce additional batches of borrowers eligible for student debt relief every other month through the spring of next year.
Some Republican lawmakers and conservative groups have argued that the administration does not have the power to recount payments. The Department of Education is facing at least one lawsuit over the account adjustments, filed by the New Civil Liberties Alliance on behalf of the conservative groups Cato Institute and the Mackinac Center for Public Policy.
Payments resumed in October
Borrowers were required to restart making their federal student loan payments in October for the first time in three-plus years after the pandemic-related pause, which essentially froze borrowers’ accounts, came to an end.
In addition to canceling some student loan debt, the Biden administration has also made efforts to lower borrowers’ monthly bills as payments resume.
A new repayment plan launched this summer, called SAVE (Saving on a Valuable Education), offers the most generous terms and will likely offer the smallest monthly payment for lower-income borrowers.
The Department of Education is also providing a 12-month on-ramp period through September 2024. During this temporary reprieve, borrowers struggling to make their monthly payments are shielded from some of the worst consequences of making a payment, including negative credit reporting. But some Democratic lawmakers have recently raised concerns that borrowers could see implementation errors during the on-ramp period.
The Biden administration is making another attempt to create a one-time student loan forgiveness program. This time, the administration is relying on a different law than it did for the program struck down by the Supreme Court and is conducting a formal rulemaking process, known as “negotiated rulemaking.” The process takes months and a proposed rule isn’t expected to be released until next year. It could then face legal challenges.