The Biden administration has approved over $116 billion in student loan forgiveness for 3.4 million borrowers across a variety of new initiatives, according to a recent Education Department update.
Despite last month’s Supreme Court ruling striking down Biden’s signature one-time student debt relief plan, other programs providing relief to borrowers remain intact. And even more student loan forgiveness is expected to be approved for borrowers in the coming months, as the administration works to implement new plans.
Here’s a breakdown.
$45 Billion In Student Loan Forgiveness Through PSLF Waiver
The Biden administration has approved $45 billion in student loan forgiveness for over 650,000 borrowers through improvements to the Public Service Loan Forgiveness program, according to last week’s announcement. The PSLF program can provide borrowers with loan forgiveness after 120 “qualifying payments” — the equivalent of 10 years. But the program has historically been plagued by complicated rules, poor oversight, and a dismal approval rate.
The Biden administration established the Limited PSLF Waiver in 2021 as a fix to the program’s longstanding problems. The waiver allowed borrowers to receive PSLF credit for periods that otherwise would not count toward loan forgiveness, such as payments made under the “wrong” repayment plan or on a non-qualifying type of federal student loan. The result has been a dramatic increase in student loan forgiveness approvals for public service borrowers.
While the Limited PSLF Waiver ended last October, the Education Department is working through a backlog of previously-submitted applications, and borrowers are continuing to receive relief. In addition, many elements of the waiver have been extended by the IDR Account Adjustment, as well as new PSLF regulations that went into effect earlier this month.
Nearly $40 Billion In Student Loan Forgiveness Under IDR Account Adjustment
The IDR Account Adjustment is similar to the Limited PSLF Waiver, but for Income-Driven Repayment plans. IDR plans tie a borrower’s monthly payments to their income, and allow for loan forgiveness of any remaining balance after 20 or 25 years, depending on the specific plan.
Just like PSLF, the IDR programs have been riddled with problems. The IDR Account Adjustment allows borrowers to receive IDR credit toward student loan forgiveness, even for borrowers who aren’t currently repaying their loans on an IDR plan. Most past periods of repayment, as well some earlier periods of deferment and forbearance, can count. This credit can also count toward PSLF for borrowers who were working in qualifying public service employment.
On Friday, the Biden administration announced that the first wave of 800,000 borrowers had been approved for nearly $40 billion in student loan forgiveness under the IDR Account Adjustment. These borrowers reached the 20 or 25-year milestone for loan forgiveness as a result of the retroactive IDR credit.
But the IDR account adjustment is just getting started. Implementation of relief will continue through 2024, and additional borrowers will cross the threshold for student loan forgiveness over the next 18 months. Many more borrowers will advance their progress toward loan forgiveness as a result of the IDR account adjustment, and can continue progressing toward loan forgiveness by repaying their loans under an IDR plan.
The Education Department published detailed guidance on the initiative in the spring, outlining how the program will work and what, if anything, borrowers must do to maximize the benefits.
$22 Billion In Student Loan Forgiveness For Borrowers Defrauded By Their Schools
The Biden administration has approved billions of dollars in additional student loan forgiveness for over 1.3 million borrowers who were defrauded by their schools. This includes automatic group discharges for borrowers who attended Corinthian Colleges and ITT Technical Institutes, for-profit institutions that collapsed following widespread allegations of misconduct and fraud.
In addition, the administration is implementing $6 billion in student debt relief under the landmark settlement agreement to resolve Sweet v. Cardona case. That class action lawsuit was originally brought by borrowers over stalled or rejected Borrower Defense to Repayment applications. The Borrower Defense program allows borrowers to request student loan forgiveness on the basis of school misconduct.
New Borrower Defense rules went into effect earlier this month. These new regulations expand the definition of school misconduct that can give rise to a viable Borrower Defense claim, and make it easier for the Education Department to initiate group relief for cohorts of similar-situated borrowers.
$5 Billion In Student Loan Forgiveness Under Updates To TPD Program
Disabled federal student loan borrowers whose ability to work is restricted by a medical condition could be eligible for student loan forgiveness under the Total and Permanent Disability (TPD) Discharge program. The TPD program provides federal student debt cancellation for borrowers with a physical or psychological medical condition that makes them unable to maintain substantial, gainful activity.
The Biden administration had modified the TPD program in response to the Covid-19 pandemic to make it easier for borrowers to receive and maintain debt relief. The Education Department waived post-discharge income-monitoring requirements, and implemented a system allowing for automated discharges for certain borrowers receiving Social Security benefits.
Earlier this month, new TPD discharge rules codified these initiatives, which were initially temporary. These new regulations also expand the category of medical professionals who can certify that a borrower qualifies for TPD relief, and makes it easier for Social Security disability benefits recipients to qualify. Over 490,000 borrowers have received $5 billion in student loan forgiveness as a result of the TPD updates, according to the Education Department.
Biden Developing New Student Loan Forgiveness Plan
While the Biden administration is continuing to implement these programs, the Education Department is also moving forward to develop a new student loan forgiveness plan to replace the one struck down by the Supreme Court in June.
This week, the department began what will likely be a lengthy process to establish new regulations governing this new debt relief program. The Biden administration will be enacting a new student loan forgiveness plan under the Higher Education Act, a different legal authority than the one the administration relied on for its earlier debt relief plan that was struck down.
“Today – less than three weeks since President Biden announced actions to open a new path to provide debt relief to as many borrowers as possible – we are taking an important step forward: to improve our regulations on the Secretary’s authority under the Higher Education Act to compromise waive, or release Federal student loans,” said Under Secretary of Education James Kvaal in a statement on Tuesday. “Our goal is to provide debt relief to borrowers, particularly those working- and middle-class borrowers who need it most.”
Details on the new student loan forgiveness plan are not yet available, and it will likely take months for the Education Department to establish new program parameters. New regulations under the Higher Education Act must go through what can be a tedious and lengthy process involving a series of public hearings and periods of public comment. But officials have promised to move forward as quickly as possible.
“We want to help borrowers who were let down by the fundamental bargain of Federal student loans–that investments in yourself and your education will help lead you to a better life,” said Kvaal. “We will help as many borrowers as possible, and we will work as quickly as possible under the law.”