President Joe Biden will formally unveil a new student loan forgiveness plan next week, even as the Education Department continues to implement billions in debt relief approved so far.
The Biden administration has approved more than $143 billion in student loan forgiveness since 2021, according to the latest Education Department data. Despite the Supreme Court knocking out Biden’s signature debt relief plan last year (which would have eliminated up to $20,000 in federal student loans for millions of borrowers), the administration has nevertheless been able to provide unprecedented relief by streamlining and reforming key loan forgiveness programs already authorized by Congress. And according to the Wall Street Journal, Biden is set to formally announce a new debt relief plan in a speech next week.
Here’s what borrowers should know.
More Than $143 Billion In Student Loan Forgiveness Approved Under Biden So Far
Through executive actions, temporary initiatives, and regulatory reforms, the Biden administration has managed to enact billions in student loan forgiveness already. The success is due to improvements made to existing loan forgiveness programs, rather than reliance on a new plan (like the one struck down by the Supreme Court last summer). This relief includes:
- $45.6 billion in student loan forgiveness for more than 900,000 borrowers through the IDR Account Adjustment initiative and other fixes to income-driven repayment.
- $62.5 billion in loan forgiveness for more than 870,000 borrowers through fixes to Public Service Loan Forgiveness.
- Over $22.5 billion in debt relief for more than 1.2 million borrowers who were subject to harmful practices or actions by their school such as misrepresentations, fraud, or closure.
- Nearly $12 billion in discharges for half a million borrowers with disabling medical conditions.
The Biden administration also established a new income-driven repayment plan called SAVE, which has resulted in low payments and accelerated student loan forgiveness for certain borrowers. More than 7 million people have enrolled in SAVE so far.
New Biden Student Loan Forgiveness Plan Is Coming
The Biden administration is developing a new student loan forgiveness plan under the Higher Education Act. This plan will be provide targeted relief to several groups of borrowers including those who have experienced negative amortization (balance increases due to interest accrual, even while in repayment), borrowers who have had loans for more than two decades, and those unable to repay their student loans due to hardship.
The Education Department completed key steps of the negotiated rulemaking process earlier this spring to create regulations governing the new program. A rulemaking committee reached consensus on core elements of the student loan forgiveness plan, particularly for hardship-based forgiveness, which increases the chances that these features will make it into the final plan.
Biden is set to formally announce the plan next week, according to reports. The plan must then go through one more round of public comments before the regulations become finalized. Some observers believe the loan forgiveness plan could become available to borrowers by this summer or fall.
Legal Challenges Expected For Biden’s Next Student Loan Forgiveness Plan
Biden’s next student loan forgiveness plan is widely expected to be challenged in court. His first debt relief program never got off the ground, as litigation resulted in temporary injunctions which blocked relief. The legal dispute eventually made its way to the Supreme Court, where the conservative majority struck down the program as an overreach that exceeded Congressional authorization.
Administration officials hope that Biden’s latest loan forgiveness effort will have a better chance of success. The new program is being established under a completely different legal authority which expressly authorizes the Education Department to cancel student debt. However, the challengers are expected to argue that this authority is narrow, and does not authorize mass student loan forgiveness.
Last month, a coalition of Republican-led states filed a lawsuit in Kansas seeking to block the new SAVE plan. A court has not issued any ruling at this time.
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