In June, the Supreme Court dealt a blow to President Joe Biden’s ambitious multi-billion dollar student loan forgiveness program. However, despite the court’s ruling, his administration has managed to cancel an unprecedented amount of student debt in recent months.
The Supreme Court’s decision thwarted Biden’s plan to forgive up to $430 billion in student debt for millions of borrowers. Despite this setback, the Biden administration has successfully canceled over $48 billion in student debt since the summer, benefitting nearly 3.6 million individuals by erasing a total of $127 billion in student loans since taking office.
This remarkable success in debt cancellation can be attributed to existing student loan forgiveness programs designed to assist specific categories of borrowers. These programs include individuals who have been repaying loans for over two decades, those defrauded by for-profit colleges, and public-sector workers.
In addition to leveraging existing programs, President Biden has countered some of the limitations imposed on forgiveness initiatives during the previous administration of Donald Trump. The administration temporarily expanded debt relief programs, thereby widening the scope of individuals who can benefit from debt cancellation.
A significant portion of the debt forgiveness, nearly $42 billion, is related to federal student loans carried by approximately 855,000 borrowers enrolled in Income-Driven Repayment (IDR) plans. The Education Department acknowledged that part of their intent was to address “past administrative failures” through these measures.
It’s worth noting that former President Trump has claimed credit for thwarting Biden’s debt forgiveness plan, attributing it to his appointment of three Supreme Court justices. In a social media statement, he suggested that his nominations had played a pivotal role in blocking the program.
Meanwhile, potential 2024 Republican presidential candidate Gov. Ron DeSantis (R-FL) has been critical of student loan forgiveness, likening it to diverting tax dollars away from individuals who did not pursue a college degree.
On October 4, the Biden administration announced an additional $9 billion in student loan debt cancellation. This included $5.2 billion for Public Service Loan Forgiveness borrowers and $2.8 billion for IDR borrowers.
Biden’s previous attempt to forgive up to $20,000 in debt per borrower faced numerous legal challenges. His latest plan to wipe out $39 billion in debt for over 800,000 individuals under the IDR program is currently under dispute at the U.S. 6th Circuit Court of Appeals. The New Civil Liberties Alliance, a group that questions the legal authority behind this forgiveness, is contesting the plan.
Sheng Li, litigation counsel at NCLA, expressed concerns about the administration’s actions, stating that they are pursuing loan cancellations through administrative means that the Supreme Court has deemed unlawful.
The Education Department has pushed back against such legal challenges, characterizing them as “desperate attempts from right-wing special interests” that aim to keep hundreds of thousands of borrowers in debt. The department is committed to defending its position in court.
At the heart of the government’s argument is the question of whether years when borrowers were in forbearance or deferment, during which they did not make loan payments, should be counted toward loan forgiveness. This issue remains a focal point in the ongoing debate over student loan debt cancellation in the United States.