Biden’s Plan B on Student Loan Forgiveness Is a Massive and Improbable Success

The Supreme Court’s rejection of President Joe Biden’s student debt cancellation plan last year was a major blow to his agenda. While the White House pledged it would still trudge forward and find another solution to grant widespread debt relief, Biden warned it would be a lengthy process. In the meantime, however, the president has wasted no time making critical changes to existing federal student loan programs to follow through on his campaign promise. As of Feb. 23, these actions have resulted in $136.6 billion in canceled federal student loan debt for 3.5 million borrowers and counting. A series of seemingly modest changes to the system have, little by little, added up to a head-spinning sum. And more is coming—including another sweeping program that could cancel hundreds of billions in debt for tens of millions of Americans.

About 40 percent of that forgiveness came from changes to the Public Service Loan Forgiveness program, where borrowers who work in federal, state, local, or tribal government or at a nonprofit are eligible for loan forgiveness after making payments for 10 years. For years, this program was notoriously difficult to navigate and at one point had denial rates upward of 99 percent. Betsy DeVos, Donald Trump’s secretary of education, enacted so many roadblocks that it was virtually impossible for most borrowers to obtain the debt relief owed to them by law. By contrast, Miguel Cardona, Biden’s secretary of education, has revamped and streamlined the program. Cardona expanded which payments are eligible to count toward forgiveness and halted penalties for borrowers who make late or partial payments. The result was a massive $56.7 billion in forgiven loans that benefited 793,000 borrowers. And these numbers are expected to only grow as the agency reviews applications for the program on a rolling basis.

The administration has also prioritized relief for lower-income borrowers, making critical improvements to the income-driven repayment program that has already canceled $45.6 billion in student loan debt for 930,500 borrowers. And on Wednesday, Biden announced an additional $1.2 billion in relief. His Education Department replaced the old, beleaguered Revised Pay As You Earn program with a new Saving on a Valuable Education plan, or SAVE plan, which has proved to be an immense success. The program targets borrowers who took out federal loans for $12,000 or less and automatically cancels their loans after 10 years while halting monthly interest charges for many borrowers. For every $1,000 borrowed above $12,000, forgiveness eligibility increases by one year. This plan addresses the biggest drivers of the student debt crisis—small loan balances and accrued interest.

The SAVE plan is important—in some ways, revolutionary—because 53 percent of borrowers actually owe less than $20,000. Many of these borrowers attended community college and are in low- and middle-income households. And overall, most borrowers in default originally borrowed $12,000 or less. The SAVE plan frees struggling borrowers who’ve made payments for 10 years, wiping out their loans in one fell swoop. All in clear accordance with existing law.

Biden’s Education Department has also been cracking down on shady colleges that scammed hundreds of thousands of students, including the former DeVry University, the University of Phoenix, ITT Technical Institute, and Corinthian Colleges Inc. DeVos made it gratuitously difficult for victims of higher education scams to get relief on their outstanding loans; she was even held in contempt for continuing to collect debt from attendees of a shuttered for-profit college in direct violation of federal court order. By contrast, Cardona has already canceled $22.5 billion for 1.3 million borrowers who went to schools that closed abruptly or broke the law. He has also proactively sought out borrowers who have a total and permanent disability using data from the Social Security Administration and canceled their debt, an initiative that has wiped out $11.7 billion in debt for 513,000 people.

Of course, there are millions of borrowers who don’t fall under these categories; they are not in an income-driven repayment plan, didn’t attend a sham school, and don’t have a total or permanent disability. But the Biden administration is still working on a solution for them, too: A major new rule by the Education Department could wipe out hundreds of billions of dollars for millions of Americans. After the Supreme Court prevented the Biden administration from using the HEROES Act for this purpose, it pivoted to a different path that runs through the Higher Education Act. This law gives the Education Department broad authority to forgive individual student loans, but the process is notoriously onerous: The agency must engage in “negotiated rulemaking,” a yearslong slog that involves multiple public meetings involving various stakeholders followed by a lengthy public comment period. (This plodding pace is the main reason why the administration first tried to use the HEROES Act, which would’ve automatically erased loans with a single executive action.) The Education Department held yet another meeting on Thursday and Friday to move the ball forward; it has already put forth a draft proposal that would allow the agency to cancel debt for almost anyone experiencing financial hardship, defined very broadly.

It’s impossible to say whether this gambit will survive the conservative judiciary. But it is undoubtedly on firmer legal footing than Biden’s Plan A. And the Education Department’s relentless push forward marks a stark contrast with the agency’s approach under Trump. DeVos used her final days in office to commission a dubious memo that cut off relief for millions of borrowers, screwing over tens of millions of Americans on her way out the door. Throughout her tenure, she used every tool at her disposal to preserve every last penny of debt. Biden’s policies are a 180-degree turn, and they have proved extraordinarily successful in the face of persistent judicial resistance.

Student debt relief advocates have good reason to be disappointed with the Supreme Court, but they have no cause to scorn the president. When legal pressure forced him to restart loan payments last year, the Education Department instituted a 12-month on-ramp to excuse those who could not yet afford payments. When the courts blocked his stab at one-time relief, the agency rolled out a series of policies that reduced or zeroed out billions in debt for millions of people. And at this moment, the agency is plowing ahead with a program that could wipe hundreds of billions of debt off the books in the coming years. The pace of progress may be frustratingly slow. But in light of the fierce pushback from conservative lawmakers and judges at every turn, the benefits to borrowers have been an improbable achievement.