The Biden administration is touting its approval of billions of dollars in student loan forgiveness for more than a million borrowers. At the same time, however, many more borrowers are struggling with deepening uncertainties about what comes next for their student loans, as several key federal student loan relief programs near an end.
Meanwhile, the Biden administration continues to send mixed signals on what borrowers should expect in the coming months.
Here’s a breakdown.
Biden Administration Touts Billions in “Targeted” Student Loan Forgiveness
The Education Department indicates that it has approved $26 billion in federal student loan forgiveness for 1.3 million borrowers. These initiatives have been achieved through a so-called “targeted” approach to student loan cancellation, where officials have temporarily expanded relief or relaxed eligibility rules under existing student loan programs.
The billions of dollars in relief includes the following:
- $8 billion in student loan cancellation through Borrower Defense to Repayment, much of which has been approved for borrowers who attended Corinthian Colleges. This relief does not include potentially billions more in student loan forgiveness that could be awarded under a proposed class action settlement agreement for borrowers who attended dozens of other institutions.
- Close to $9 billion in student loan forgiveness for disabled borrowers under the Total and Permanent Disability (TPD) discharge program.
- Over $8 billion in student loan forgiveness through the Limited PSLF Waiver initiative, which has temporarily relaxed eligibility rules for Public Service Loan Forgiveness.
- Over $1 billion in student loan cancellation for borrowers whose school closed while they were enrolled.
Not included in the $26 billion figure are additional billions of dollars in student loan payments and interest that have gone uncollected since March 2020 under the ongoing CARES Act student loan pause.
While the student loan forgiveness approved under these initiatives is substantial, it barely scratches the surface of the $1.8 trillion in total outstanding student loan debt. And advocates have argued that the initiatives don’t go nearly far enough in providing lasting relief to over 40 million in student loan borrowers.
Meanwhile, several of these key initiatives are temporary and set to end in a matter of weeks or months. Biden administration officials have been ambiguous about what may come next.
Student Loan Pause Is Set to End in Five Weeks
The national student loan pause — which has temporarily stopped payments and halted interest on all government-held federal student loans — has been in effect for well over two years. After a series of short-term extensions by both President Trump and President Biden, the most recent extension is set to end on August 31, which is in just over five weeks.
Top Biden officials have long suggested that another extension might happen, particularly if economic and pandemic conditions warrant one. But with only weeks to go before student loan billing resumes, the administration has not issued any public decision. At the same time, the Education Department and its contracted loan servicers have not been making any efforts to warn borrowers about a return to repayment this fall. The uncertainty leaves millions of borrowers unsure about whether or not they need to start preparing to make student loan payments again in the coming weeks.
Student Loan Forgiveness Expansion for Public Service Borrowers Ends in Three Months
Under the Limited PSLF Waiver, which the Biden administration implemented last fall, the Education Department has temporarily relaxed strict rules governing the Public Service Loan Forgiveness (PSLF) program. PSLF provides borrowers with federal student loan forgiveness after 10 years of qualifying employment with nonprofit or public organizations.
The dramatic expansion of relief under the waiver has allowed the Department to approve over $8 billion in student loan forgiveness. Even more may be on the way.
But the initiative is scheduled to end on October 31, 2022. While that still leaves a little more than three months, some borrowers have to take certain steps to qualify (like consolidating their loans, or getting PSLF forms signed by their employers) by the deadline. And since those processes can sometimes take weeks or even months, as a practical matter, some borrowers have very little time to qualify for student loan forgiveness under the waiver initiative.
Advocacy groups for student loan borrowers are urging the Biden administration to extend the Limited PSLF Waiver. But top Education Department officials have not indicated that they will do so, instead urging borrowers to apply before October 31.
Defaulted Student Loan Borrowers In Limbo
The Biden administration has indicated that it intends on automatically curing federal student loan defaults and restoring these loans to good standing automatically. While all collections efforts against defaulted federal student loan borrowers have been suspended under the national student loan pause, these borrowers have remained in default and in limbo status since 2020.
Under “Operation Fresh Start,” defaulted federal student loan borrowers are supposed to have their defaults cured and their federal loans restored to good standing before the student loan pause ends and payments resume. But the Education Department has released minimal details on how this process will work or when it will be completed. It is unclear if the Department would be capable of implementing this initiative by August 31, when the student loan payment pause ends.
Is Broader Student Loan Forgiveness Still Under Consideration?
Earlier this year, President Biden seemed closer than ever to enacting some form of wide-scale student loan forgiveness — far beyond the $26 billion in “targeted” student loan forgiveness enacted so far. Reports indicated that Biden and top officials were focusing on $10,000 in across-the-board student loan forgiveness for borrowers, with eligibility caps based on income.
Biden himself suggested that a decision on student loan forgiveness was imminent, possibly within a matter of weeks. But that was in April, and no public announcement followed. Last month, Biden again confirmed that a decision on student loan forgiveness would be made soon. But again, no formal announcement followed.
Administration officials have previously suggested that a decision on student loan forgiveness would be made prior to the student loan payment pause ending. But with that August 31 expiration date rapidly approaching, and no word on whether the Education Department will extend the payment pause or enact wide-scale student loan forgiveness, borrowers remain in the dark.