Biden is drawing closer to a decision on student-debt forgiveness. Here's everything he's done so far to address the $1.7 trillion crisis.
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- Since Biden took office, he's taken a number of actions to address the $1.7 trillion student-debt crisis.
- They include cancelling debt for borrowers with disabilities and extending the payment pause on loans.
- Democrats are pushing for him to cancel $50,000 in student debt per person, which the DOJ is reviewing.
Forty-five million Americans have a $1.7 trillion student-debt burden in the country. And many of them, alongside Democrats and advocates, want President Joe Biden to forgive $50,000 of their debt.
He hasn't done that yet, but the president has taken steps to lessen the burden and provide relief during the pandemic.
As one of his first actions in office, Biden extended the pause on student-loan payments, coupled with zero growth in interest, to ensure borrowers suffering financially would not have to worry about paying off their loans.
Since then, Education Secretary Miguel Cardona has cancelled billions in student debt for borrowers with disabilities and borrowers defrauded by for-profit schools. He's also started conducting reviews of student loan forgiveness programs that don't work as they should.
But Democrats want Biden to do more.
They have been keeping the pressure on the president to cancel $50,000 in student debt per person using his executive authority. Biden has expressed hesitancy to do so, and although he has asked the Education and Justice Departments to review his executive abilities to wipe out that debt, Democrats remain adamant that he can, and should, cancel student debt immediately with the flick of a pen.
"Student loan cancellation could occur today," Massachusetts Sen. Elizabeth Warren told Insider. "The president just needs to sign a piece of paper canceling that debt. It doesn't take any act of Congress or any amendment to the budget."
Detailed below is everything Biden has done to date to confront the student debt crisis:
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On his first day in office, Biden asked the Education Department to extend the pause on federal student loan payments through September 30, 2020, following Education Secretary Betsy DeVos' extension of it through the end of January 2020. This was accompanied by a 0% interest rate during that time period.
National Economic Council Director Brian Deese said at the time that the extension would alleviate burdens on many households. "In this moment of economic hardship, we want to reduce the burden of these financial trade-offs," Deese said.
This extension, however did not apply to the more than 7 million borrowers with loans held by private companies.
In August, nearly two months before the pause was set to expire, Education Secretary Miguel Cardona announced the pause would be extended through January 31, 2022. This is the fourth extension of the pause during the pandemic, and Cardona said in a statement that it will be the "final" one.
"The payment pause has been a lifeline that allowed million of Americans to focus on their families, health, and finances instead of student loans during the national emergency," Cardona said.
Despite the "final" language, though, Biden surprised borrowers on December 22 when he extended the pause through May 1, allowing for 3 months of additional relief. This pause was due to rising COVID-19 cases caused by the Omicron variant.
And on April 5, 2022, Biden used his authority for his fourth time to once again extend the student-loan payment pause an additional four months, through August 31. He said that the country is still recovering from the pandemic, and forcing borrowers to resume payments will disrupt recovery and cause many borrowers to fall into delinquency and default.
Reuters/Andrew Burton
Biden's payments pause on student loans initially only applied to borrowers with federal loans, meaning those with privately-held loans had to continue making payments during the pandemic.
But on March 29, Cardona expanded the scope of that pause to apply to loans under the Federal Family Education Loan (FFEL) Program, which are privately held. This helped 1.14 million additional borrowers.
The FFEL Program ended in 2010, but according to Education Department data, 11.2 million borrowers still have outstanding FFEL loans totaling over $248 billion. And while the department acquired some of the outstanding FFEL loans, many are still privately owned and were not affected by the earlier pause on federally owned student loan payments.
According to a press release, any FFEL borrower who made a payment in the past year will have the option to request a refund.
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At a CNN town hall in February, Biden said he doesn't have the executive authority to cancel up to $50,000 in student debt per person, but said he is prepared to cancel $10,000 — something he campaigned on. The same month, White House Press Secretary Jen Psaki told reporters that Biden will ask the Justice Department to review his legal authority to cancel $50,000 in student debt. Biden's administration has not yet commented on the status of the Justice Department's review.
However, Insider reported that he has yet to deliver on that campaign promise, and while Biden said he would support legislation brought to him to cancel $10,000 in student debt, Democrats argue that legislation takes too long, and the president can cancel debt immediately using his executive authority.
"We have a lot on our plate, including moving to infrastructure and all kinds of other things," Warren said in a February press call. "I have legislation to do it, but to me, that's just not a reason to hold off. The president can do this, and I very much hope that he will."
And White House Chief of Staff Ron Klain told Politico in April that Biden had asked Cardona to create a memo on the president's legal authority to forgive $50,000 in student loans per person.
Biden will "look at that legal authority," Klain said. "He'll look at the policy issues around that, and he'll make a decision. He hasn't made a decision on that either way, and, in fact, he hasn't yet gotten the memos that he needs to start to focus on that decision."
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On March 18, Cardona reversed a Trump-era policy that gave only partial relief to defrauded students.
The debt-cancellation methodology, known as the "borrower defense to repayment" — approved by Education Secretary Betsy DeVos — compared the median earnings of graduates with debt-relief claims to the median earnings of graduates in comparable programs. The bigger the difference, the more relief the applicant would receive.
But compared to a 99.2% approval rate for defrauded claims filed under President Barack Obama, DeVos had a 99.4% denial rate for borrowers and ran up a huge backlog of claims from eligible defrauded borrowers seeking student debt forgiveness.
Cardona said that process did not result in appropriate relief determination and needed to be reversed, and a judge recently ruled that DeVos must testify over why so few borrowers were approved for loan forgiveness.
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So far, Cardona has cancelled over $7 billion in student debt for borrowers defrauded by for-profit schools.
For-profit institutions that shut down years ago, such as Corinthian Colleges and ITT Technical Institutes, were accused of violating federal law by persuading their students to take out loans, and Cardona's new policy helped approximately 72,000 of those students receive $1 billion in loan cancellation in March.
"Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution's misconduct," Cardona said in a statement. "A close review of these claims and the associated evidence showed these borrowers have been harmed and we will grant them a fresh start from their debt."
On June 16, Cardona cancelled student debt for 18,000 additional borrowers defrauded by ITT Technical Institutes, totaling to about $500 million in debt relief.
The Education Department announced in a press release that 18,000 borrowers who attended ITT Tech will get 100% of their student debt forgiven, and the department will begin notifying borrowers of their approvals for loan forgiveness in the coming weeks and will work quickly to discharge those borrowers' loan balances.
"Our action today will give thousands of borrowers a fresh start and the relief they deserve after ITT repeatedly lied to them," Cardona said in a statement.
An additional 115,000 defrauded ITT borrowers got $1.1 billion in student debt relief on August 26, applicable for those who did not complete their degree and left ITT on or after March 31, 2008.
In the first time since 2017 that borrower defense claims have been approved for borrowers outside of ITT Tech, Corinthian Colleges, and American Career Institute, on July 9, Cardona cancelled student debt for 1,800 borrowers who attended the for-profit schools Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute.
More recently, 16,000 more borrowers — including 1,800 former DeVry University students — received $415 million in relief on February 17 after being subject to the school's fraudulent behavior, and on April 28, Cardona wiped out student debt for an additional 28,000 borrowers from Marinello, totaling $238 million in relief.
And in the department's biggest action on borrower defense to date, it announced on June 1 that it would be wiping out the remaining $5.8 billion in student debt for 560,000 borrowers defrauded by Corinthian Colleges. This was a group discharge and impacts those who did not submit applications themselves.
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On March 29, Cardona cancelled $1.3 billion of student debt for about 41,000 borrowers with disabilities.
He also waived an Obama-era requirement for those borrowers to submit documentation during a three-year monitoring period to verify that their incomes did not exceed the poverty line of $12,880 annually for a single person.
A 2016 report from the Government Accountability Office found that 98% of reinstated disability discharges occurred because borrowers did not submit the required documentation — not because their incomes were too high.
"Borrowers with total and permanent disabilities should focus on their well-being, not put their health on the line to submit earnings information during the COVID-19 emergency," Cardona said in a statement. "Waiving these requirements will ensure no borrower who is totally and permanently disabled risks having to repay their loans simply because they could not submit paperwork."
But experts said this action did not make up for the significant number of borrowers who never received loan forgiveness simply due to paperwork.
"Today's announcement is not cause for celebration but rather for outrage," Persis Yu, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center, said in a statement at the time. "It is scandalous that the Department revoked the loan discharges for 41,000 borrowers with total and permanent disabilities due to paperwork issues during a pandemic."
Then, on August 19, Cardona wiped out student debt for 323,000 additional borrowers with disabilities, resulting in $5.8 billion in student-debt relief, and he "indefinitely" waived the requirement to provide proof of income.
"We've heard loud and clear from borrowers with disabilities and advocates about the need for this change and we are excited to follow through on it," Cardona said. "This change reduces red tape with the aim of making processes as simple as possible for borrowers who need support."
Cardona also said the department will consider further waiving the three-year monitoring period.
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On May 24, the Education Department announced it is beginning the process of issuing new higher education regulations, mainly concerning student debt-forgiveness programs.
The first step of the process will be through holding hearings in June to receive feedback on "regulations that would address gaps in postsecondary outcomes, such as retention, completion, student loan repayment, and loan default," according to a press release.
The department will also seek comments on rules regarding student loan forgiveness for borrowers in public service and borrowers with disabilities, among other things.
The main topics the department plans to address concern the methods for forgiving debt for defrauded borrowers and borrowers with disabilities, along with looking into the Public Service Loan Forgiveness (PSLF) program, which has rejected 98% of eligible borrowers.
Forbes reported that the process to implement new rules could be lengthy, though. After the hearings in June, there will be "negotiated rulemaking," during which stakeholders meet with the department to review proposed regulations, and it could take a year or longer until changes are implemented.
Biden's regulatory agenda also included plans to review loan forgiveness programs, but Insider reported on June 15 that details for those reviews remain unclear, and an Education Department spokesperson told Insider there is not yet a timeline for when improvements will be implemented.
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The Education Department announced on August 20 that 47,000 former and active-duty service members will get the interest on their student loans retroactively waived.
The relief will happen automatically, removing the requirement for service members to make individual requests to access the benefit, which, according to the press release, will make service members eight times more likely to receive the benefit than in 2019.
"Brave men and women in uniform serving our country can now focus on doing their jobs and coming home safely, not filling out more paperwork to access their hard-earned benefits," FSA Chief Operating Officer Richard Cordray said in a statement. "Federal Student Aid is grateful for our strong partnership with the Department of Defense, and we will seek to reduce red tape for service members wherever possible."
Service members deployed to areas that qualify them for "imminent danger or hostile fire pay," according to the Higher Education Act, should not accrue interest on student loans that were first disbursed on or after October 1, 2008. But since the process was not previously automated, only a small proportion of eligible service members were able to access the benefit, with only about 4,800 of them getting relief in 2019.
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The Education Department on October 6 announced a major overhaul of the Public Service Loan Forgiveness (PSLF) program. It's supposed to wipe out student debt for public servants after 120 qualifying monthly payments, but to date it has rejected 98% of applicants due to deep flaws within the program.
According to the department's press release, it will implement a limited-time waiver through October 31, 2022, that will allow borrowers to count payments from any federal loan programs or repayment plans toward loan forgiveness through PSLF, including programs and plans that were not previously eligible.
The department said this waiver alone would bring 550,000 borrowers closer to student-debt relief automatically, including 22,000 borrowers who will be immediately eligible for relief without any action on their part, totaling $1.74 billion in forgiveness. An additional 27,000 borrowers could also qualify for $2.82 billion in forgiveness if they certify additional periods of employment.
"Borrowers who devote a decade of their lives to public service should be able to rely on the promise of Public Service Loan Forgiveness," Education Secretary Miguel Cardona said in a statement. "The system has not delivered on that promise to date, but that is about to change for many borrowers who have served their communities and their country."
Other changes, to be rolled out in the next few months, include making payments easier to qualify for the program and reviewing denied applications and correcting errors.
On November 11, Cardona announced that a month after the reforms were announced, 10,000 borrowers have already gotten $715 million in student debt wiped out, and 30,000 borrowers will get $2 billion in relief in the coming weeks.
And actions announced on April 19 wiped out student debt for 40,000 PSLF borrowers through revisions to payment tracking progress.
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An additional four months of relief was not the only significant measure in Biden's April announcement.
Along with extending the student-loan payment pause for his fourth time, through August 31, the Education Department also announced it will work to give borrowers who were behind on their debt payments — either in default or delinquency — a "fresh start" and return them to good standing before they would have to reenter repayment.
This would impact nearly 8 million borrowers who fall into those categories, and the measure also extends to borrowers who have privately-held loans, not just federal.
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On April 19, the Education Department announced steps to fix income-driven repayment plans, which are intended to give borrowers affordable debt payments by creating a monthly payment plan based on a borrower's income and family size. It promises loan forgiveness after 20-25 years on the plan.
However, recent reports revealed the vast majority of borrowers have been blocked from forgiveness due to failure in tracking payment accurately, which is why the department is taking steps to reform the plans, bringing 3.6 million borrowers closer to relief.
"Student loans were never meant to be a life sentence, but it's certainly felt that way for borrowers locked out of debt relief they're eligible for," Secretary of Education Miguel Cardona said in a statement.
The new actions will include a one-time revision to count any past payments toward loan forgiveness progress, along with issuing new guidance to student-loan companies on modernized ways to track payments accurately.
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