Biden administration announces $39 billion in student loan forgiveness
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The Biden administration announced Friday that it will forgive the student loans of more than 800,000 borrowers, wiping out $39 billion in debt. The Education Department first announced last year a one-time adjustment to help address inaccuracies in payment counts for borrowers in income-driven repayment plans, or people who might qualify for the debt-relief programs. The plans allow forgiveness after making a certain number of monthly payments, typically after 20 or 25 years.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress toward forgiveness,” Education Secretary Miguel Cardona said in a statement Friday. “By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve,” he said.
Friday’s announcement drew criticism from some Republicans in part because it comes two weeks after the Supreme Court rejected a broader plan by the Biden administration to forgive more than $400 billion in federal student loan debt. That plan would have erased up to $20,000 in federal student debt for tens of millions of borrowers meeting certain income limits. The administration argued that the Higher Education Relief Opportunities for Students Act of 2003 gave the department authority to forgive debt. But critics argued that the plan burdened taxpayers with other peoples’ unpaid debt, and said the effort was an attempt to find loopholes in the legislation to push through sweeping changes that Congress would be unlikely to pass.
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Within hours of the ruling, President Biden said he would pursue a “new path” to give borrowers relief using a different law, the Higher Education Act.
Biden had campaigned on a promise to ease student-loan debt, an issue popular with his political base, and one with added urgency now that loan payments that had been paused during the pandemic are set to resume this fall. The administration has announced other relief measures since Biden took office.
The plan announced Friday draws on the education secretary’s existing authority over loan repayment programs.
But critics argue the administration is going too far.
“In the wake of the court decision, the administration is really abusing its authority and trying to give people breaks that they didn’t earn,” said Lindsey Burke, director of the Center for Education Policy at the Heritage Foundation. “This is ultimately going to continue to drive up college tuition and drive up prices and is going to lay the groundwork for more borrowers to demand loan cancellation in the future.”
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Rep. Virginia Foxx (R-N.C.), chairwoman of the House Education Committee, on Friday said: “The Biden administration’s blatantly political attempt to circumvent the Supreme Court is shameful.”
“The Biden administration is trampling the rule of law, hurting borrowers, and abusing taxpayers,” Foxx said in a statement. “From day one, this administration has encouraged borrowers not to repay their loans and has expected taxpayers to foot the bill.”
Abby Shafroth, director of the Student Loan Borrower Assistance Project, said Friday’s announcement has no relation to the Supreme Court case and doesn’t raise legal concerns because it’s built on long-standing congressional authority over income-driven repayment plans. “Congress created these plans that provide debt relief to people who make payments based on their income for 20 to 25 years. … What we’re seeing today are some long-needed fixes to that program so that borrowers actually get the relief that Congress intended.”
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Preston Cooper, a senior fellow in higher education policy with the Foundation for Research on Equal Opportunity, said the administration has fairly broad authority under the law to set the terms of income-driven repayment plans. But he suggested that some might argue that even if technically legal, Friday’s announcement goes far beyond what Congress intended. “There might be a case against it on those grounds,” said Cooper, who opposed Biden’s original debt-relief plan.
Cooper said he anticipates the $39 billion figure to underestimate the true scope of the measure, because additional borrowers will qualify in years to come.
Income-driven repayment plans have been around for years, but have drawn criticism because of poor communication between the Education Department, loan servicers and borrowers. A NPR investigation in 2022 detailed failures in the program.
According to the Education Department, Friday’s action “also addresses concerns about practices by loan servicers that put borrowers into forbearance in violation of Department rules.”
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In April 2022, the Education Department said it would offer a one-time adjustment to address any inaccurate payment counts. At the time, the agency said more than 3.6 million borrowers could get additional credit for payments.
“Eligible borrowers will be informed by the Department starting today that they qualify for forgiveness without further action on their part,” the department announced. Types of loans covered include Direct Loans or Federal Family Education Loans held by the Education Department, including Parent PLUS loans. Borrowers are likely to hear from their loan servicers in about a month that their loans have been discharged, according to the department.
“Many, many people are going to benefit from this,” said Laura Perna, a professor in the Graduate School of Education at the University of Pennsylvania who studies college access and affordability. “We essentially have a system right now where, if you want to go to college, many students have to borrow. There’s not a choice.” Given the benefits of higher education not only to individuals but to society, she said, if loans are required, there needs to be a system that minimizes the harm of that long-term debt.
Biden and Vice President Harris said Friday they remain committed to delivering relief for student loan borrowers.
“I have long said that college should be a ticket to the middle class — not a burden that weighs down on families for decades,” Biden said in a statement. “My Administration is delivering on that commitment.”
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Source: The Washington Post
