Although the Supreme Court struck down President Joe Biden’s signature student loan forgiveness program in late June, the administration has since found ways to cancel more than $48 billion in debt.
The cancellations were made through the existing federal student loan forgiveness program, which is limited to certain categories of borrowers, such as public sector employees and those who were defrauded by for-profit colleges. Borrowers who have been making payments for at least 20 years.
These programs are He rejected a forgiveness plan that would have canceled about $430 billion of the $1.6 trillion in outstanding federal student loan debt all at once.
Since taking office, the Biden administration has routinely granted student loan forgiveness through these existing programs, disbursing a total of $127 billion to approximately 3.6 million people.
This is more student loan forgiveness than granted under any other administration, temporarily expands some debt relief programs, and reduces past administrative changes made to borrowers’ student loan accounts. The Biden administration’s efforts to right wrongs are partly to blame. This action is in sharp contrast to the Trump administration, which sought to limit some of these forgiveness programs or delay the processing of some applications.
But Biden’s Republican critics argue that at least some of his debt relief measures are illegal and a tort. attempt to circumvent a Supreme Court ruling.
Recalculate past payments and correct errors
Approximately $42 billion in federal student loan debt has been canceled for approximately 855,000 borrowers enrolled in income-driven repayment plans. This is largely due to the Biden administration’s efforts to recalculate borrowers’ past payments and revise the agency’s claims. “past It’s an administrative failure. ”
Borrowers enrolled in income-driven repayment plans, which have been available in some form since 1993, are generally eligible for debt forgiveness after making at least 20 years of qualifying payments. This plan lowers monthly payments based on the borrower’s income and family size.
But the Department of Education has historically struggled to keep track of borrowers’ payments.
last year, Recommended by the U.S. Board of Accountants After discovering that there are thousands of outstanding loans that could already be eligible for forgiveness, the ministry called for more steps to be taken to ensure borrowers receive the forgiveness they deserve. .
“These borrowers have received the forgiveness they should have received under a program authorized by Congress that has been operating properly for decades,” Education Department officials told CNN in an emailed statement. ” he said.
Generally, a one-time recalculation gives the borrower credit towards forgiveness for the month they made the payment, regardless of what repayment plan they were enrolled in at the time. According to the Ministry of Education. This recount will particularly help borrowers who may have been improperly placed into extended forbearance periods by their student loan repayment companies.
The one-time account adjustment effort was first announced by the Biden administration in April 2022, but cancellations began earlier this year.
Government announces $39 billion in student loan debt will be canceled in just two weeks’ time After the Supreme Court struck down Biden’s signature loan forgiveness program, there is widespread skepticism about the legality of the measure.
“The Biden administration is trampling the rule of law, harming borrowers, and abusing taxpayers to chase headlines,” said Republican Rep. Virginia Foxx, chair of the House Education Committee. Workforce said in a statement at the time:
“Today’s celebration of not counting payments as payments is just the latest example of ongoing delusion in the White House,” she added.
The Biden administration faces at least one lawsuit over account adjustments brought by the Neo-Civil Liberties Union on behalf of the conservative groups Cato Institute and Mackinac Center for Public Policy. Plaintiffs recently filed an appeal later the lawsuit was dismissed A federal judge in Michigan ruled they had no standing to bring charges.
Lawyers for the Biden administration have not yet been asked to respond to the complaint or identify the legal authority it relied on to adjust past payments and cancel billions of dollars in student loan debt. do not have.
“Given the Department’s broad authority over the federal student loan program in general and income-based repayment plans in particular, there are several sources of authority that the Department may rely on,” said National Consumers Advocates. said co-director Abby Shafroth. Director of the Law Center and Student Loan Borrower Assistance Project.
Even if the lawsuit were successful, Shafroth said he would be surprised if the court’s decision ended up revoking debt forgiveness that had already been made.
Expanding debt relief programs for public sector workers
Since President Biden took office, nearly $51 billion in student loan debt has been canceled for 715,000 borrowers through the Public Service Loan Forgiveness Program.
The PSLF program cancels outstanding federal student loan debt for public sector workers who have made 120 eligible monthly student loan payments, or approximately 10 years’ worth of payments. A variety of government and nonprofit employees may qualify for the program, including teachers, social workers, some nurses and doctors, and government attorneys.
The program was created by Congress in 2007 but had operational problems before Biden took office.
In 2021, Biden invokes temporary exemptionexpands eligibility and allows some borrowers to retroactively receive credits for past payments that did not qualify for PSLF.
95% or more Biden’s temporary forgiveness made eligible borrowers eligible for debt forgiveness under the PSLF program.
The temporary benefit ended in October 2022. However, the Department of Education subsequently implemented an administrative rulemaking process that permanently changed some of the eligibility limits for the PSLF program. This change will allow a borrower to receive credit against her PSLF in installments or in a lump sum if her payments are late. These changes took effect in his July.
The Biden administration canceled $22.5 billion in student loan debt for more than 1.3 million borrowers through an existing program known as Borrower Defense, which provides student loan relief to people who were defrauded from college. .
Most recently, $37 million was canceled for more than 1,200 borrowers attending the University of Phoenix because the government found the for-profit college had misled students about job prospects. It is.
The Borrower Defense Program was created by Congress decades ago but was little used until the collapse of Corinthian Colleges, a for-profit school network, in 2015.
Under the Biden administration, the Department of Education has made progress in reducing the backlog of debtor defense claims that built up during the Trump administration.
At one point, more than 200,000 borrower defense claims were pending as former Education Secretary Betsy DeVos sought to limit the program. Those efforts ultimately failed.
The Biden administration also made it easier for disabled borrowers to receive debt relief. they have rights. Since 2021, approximately 513,000 borrowers with total and permanent disabilities have received $11.7 billion in student loan forgiveness.
Previously, borrowers had to provide documentation from their doctor, the Social Security Administration, or the Department of Veterans Affairs to show they were eligible for debt forgiveness.
But the Biden administration changed the rules to allow the Department of Education to automatically exempt borrowers with disabilities identified through administrative data matching with the Social Security Administration without the borrowers needing to submit documentation.