WASHINGTON, DC – MAY 2: US President Joe Biden speaks from the Roosevelt Room of the White House … [+]
President Joe Biden announced latest student loan forgiveness this week. With this latest round of debt relief, the federal government has now approved over $160 billion in loan forgiveness over the past three years, representing about 10% of all outstanding student debt.
Biden’s latest group release authorization targets borrowers who attended schools accused of widespread misconduct. Providing debt relief to such borrowers has been a key a part of the federal government’s multi-pronged, phased approach to implementing student loan forgiveness initiatives. Meanwhile, the Department of Education is moving closer to launching a brand new student debt relief program.
“This is the latest — but not the last — step to hold bad actors accountable and help people who need it,” Biden said in an announcement on X on Wednesday, hinting that more loan forgiveness was within the works.
Biden’s phased approach to student loan forgiveness
Following last summer’s Supreme Court decision striking down President Biden’s plan for mass student loan forgiveness, the administration has used other tools to pass widespread relief. By using executive authority to update, expand, or calm down regulations for several existing loan forgiveness programs, the Department of Education has succeeded in canceling student loan debt for at the very least 4.6 million borrowers. This accommodates:
- Nearly $50 billion in loan forgiveness through IDR Account Adjustment, an initiative to deal with long-standing problems with income-driven repayment plans. Nearly a million borrowers have already benefited, and more borrowers are expected to qualify in the approaching months because the Department of Education completes implementation.
- More than $60 billion in loan forgiveness for nearly 900,000 nonprofit and government organizations through corrections and enhancements to the Public Service Loan Forgiveness Program. This represents a hundredfold increase in PSLF approvals since 2020.
- Nearly $5 billion in debt relief through an “early” student loan forgiveness feature in Biden’s latest SAVE plan, an income-based option that leads to lower payments and faster debt relief for a lot of borrowers.
- More than $14 billion in relief for borrowers with disabilities through regulatory changes that eliminated bureaucratic hurdles and simplified relief for many individuals battling disabling health conditions.
$28 billion in student loan forgiveness for borrowers harmed by academic misconduct
In addition, the Biden administration has approved greater than $28 billion in student loan forgiveness for 1.6 million borrowers who were harmed by their schools, akin to through misrepresentation or closure. The Department of Education has approved this relief under several existing programs, akin to Borrower Defense to Repaid and the Closed School Discharge Initiative, in addition to legal settlements.
The latest round of debt relief announced this week focuses on arts institutions, which the department has found frequently mislead potential students about profession prospects, earnings and job placement services. More than 300,000 former Arts Institute students can be robotically laid off in batches as a part of this latest relief effort. This is analogous to the group layoffs approved for former students at Corinthian Colleges and ITT Technical Institutes, two other national for-profit college chains which have closed.
“My administration is canceling $6.1 billion in debt for 317,000 borrowers who attended the Art Institutes, an institution that falsified data and defrauded borrowers,” President Biden said in his statement Wednesday.
Biden’s latest student loan forgiveness plan could roll out this fall
Meanwhile, the Biden administration is finalizing plans to roll out a brand new student loan forgiveness plan, intended as a so-called “Plan B” to this system that the Supreme Court blocked last 12 months.
This latest plan is aimed toward providing relief to certain groups. These include those who experienced significant interest expense and capitalization; those that entered repayment greater than 20 or 25 years ago; Individuals who qualify for existing student loan forgiveness plans but haven’t yet applied or enrolled; and former students who attended institutions that were unable to access government financial aid programs as a result of poor results or were otherwise considered “substandard” schools.
Last month, the Department of Education released formal regulations for this system after a lengthy rulemaking process. The regulations can now be commented on publicly until May seventeenth. The ministry will then publish a final version of the regulations. The plan shouldn’t be expected to return into effect until fall of this 12 months and is prone to face legal challenges.
Another option for student loan forgiveness based on hardship
As a part of Biden’s latest, broad loan forgiveness plan, the administration can be proposing a fifth path to relief based on hardship. The Department of Education has not yet published proposed regulations for this selection. But based on a previous public regulatory hearing, the Department will likely consider several aspects in assessing a borrower’s eligibility for hardship loan forgiveness. This includes age, disability, income, expenses, other debts, and prior approval of other public, means-tested advantages.
Critics of President Biden’s phased-in approach to student loan forgiveness have called on the federal government to go so far as it may well with this upcoming hardship-based debt relief initiative. Some advocates have called on Biden to categorise student loan debt as a hardship in and of itself Elimination of most existing student loans.
However, it seems unlikely that the Department of Education will achieve this. Officials imagine a targeted approach to debt relief is more likely to resist legal challenges. But with a Supreme Court hostile to any loan forgiveness initiative, it’s unclear whether a broad debt relief plan would ultimately be upheld.
