More than $1.7 trillion in federal student loan debt has been accumulated by 45 million borrowers. President Joe Biden has announced several rounds of student debt cancellations for targeted groups of borrowers since taking office, totaling about $16 billion.
Despite the fact that Biden campaigned on canceling up to $10,000 in debt per borrower, the forgiveness he’s approved only accounts for about 1% of all federal student loan debt. According to the Education Data Initiative, federal student loan borrowers have an average debt of $36,510, and some top Democratic lawmakers continue to press Biden to forgive up to $50,000 in debt per borrower.
“Student debt makes it more difficult to achieve the American dream—the sacred promise that if you work hard and follow the rules, you’ll make it here in America one day,” Senate Majority Leader Chuck Schumer said in October 2021. “When people have to pay off student debt, they may have to postpone purchasing a home, a car, getting married, or even entering the profession of their choice.”
There’s still a long way to go in terms of canceling student loan debt, but the forgiveness announced during Biden’s presidency has already benefited nearly 700,000 borrowers. Biden is also the president with the most student loan debt cancellations—and he’s only been in office for a little over a year. The rounds of forgiveness announced so far have been summarized by Fortune.
Read also: Why Amazon is paying nearly $9 billion for MGM and James Bond
Public service workers
The Public Service Loan Forgiveness (PSLF) program was established in 2007 by Congress to provide debt relief to public employees who had made 10 years’ worth of payments, or 120 qualifying monthly student loan payments. However, the program was largely ineffective in assisting public employees; the program denied 98 percent of borrowers who applied for forgiveness due to a variety of issues with the approval process.
Changes to the program were announced by the Education Department in October 2021, making it easier to qualify for forgiveness. Over 100,000 borrowers have had their loans forgiven, totaling approximately $6 billion.
One of the main reasons for the program’s failure was that it failed to account for payments on certain types of loans. Borrowers can count payments on loans from the Federal Family Education Loan (FFEL) or Perkins Loan programs if they submit a PSLF form by Oct. 31, 2022, under a limited waiver announced in October 2021.
In a letter to PSLF borrowers dated Nov. 8, 2021, Federal Student Aid chief operating officer Richard Cordray wrote, “Our new approach will add months or years of service credit for huge numbers of student loan borrowers by counting certain payments that were previously ineligible.” “According to the changes, borrowers may be eligible for full loan forgiveness in some cases.”
View Fortune’s rankings of the best business analytics programs, data science programs, and part-time, executive, full-time, and online MBA programs to see how the schools you’re considering fared.
Defrauded borrowers
Borrowers who have been defrauded by their educational institutions can file a claim with the Education Department. The department announced in March 2021 that it would streamline the debt cancellation process.
Several rounds of forgiveness have resulted in billions of dollars in debt relief for defrauded borrowers. Around 72,000 borrowers who attended Corinthian Colleges, ITT Technical Institute, and American Career Institute received the first round of forgiveness, which totaled about $1 billion.
The Education Department announced additional rounds of assistance for borrowers who attended Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute last summer. These former students learned that their $55.6 million in student loans would be forgiven. Then, in August 2021, approximately 115,000 borrowers who never graduated from ITT Tech received a total of $1.1 billion in debt relief. In September 2021, borrowers began receiving automatic discharges for their student loans.
Biden announced another round of forgiveness in February for defrauded borrowers who attended DeVry University, Westwood College, Corinthian Colleges, Marinello Schools of Beauty, ITT Technical Institute’s nursing program, and Minnesota School of Business/Globe University’s criminal justice programs. That round of forgiveness totaled $415 million and benefited 16,000 borrowers, with about 20% of the forgiveness going to DeVry students.
While these rounds of forgiveness have aided many borrowers who attended deceptive schools, the Project on Predatory Student Lending at Harvard Law School reports that there are still over 260,000 unresolved borrower defense applications.
“The [Education] Department has demonstrated that it is capable of processing borrower defense claims and canceling debts when students are cheated by their schools,” Eileen Connor, director of the Project on Predatory Student Lending, said in a statement.
Disabled borrowers
In August 2021, the Education Department announced a massive round of debt forgiveness for borrowers who have a “total and permanent” disability (TPD). When it was first announced, the $5.8 billion in forgiveness was the largest dollar amount during Biden’s presidency, and it went to 323,000 borrowers.
Due to changes in the verification process, forgiveness for borrowers with a TPD had increased to $7 billion for over 400,000 people as of January. Rather than requiring applicants to declare a TPD through the Department of Veterans Affairs, the Social Security Administration uses a data match to identify borrowers. The Social Security Administration determines whether a borrower is still employable.
Borrowers who have a TPD will have their loans discharged automatically.
In an August 2021 statement, Education Secretary Miguel Cardona said, “This change reduces red tape with the goal of making processes as simple as possible for borrowers who need support.”
