Status of Biden's Student Loan Relief Promises to Young Voters

What is the status of the student debt relief measures proposed by elected officials?

Shadi Bushra

Written By: Shadi Bushra

Published: 6/28/2022

Key Insights:
  • Biden has tackled the backlog of thousands of loan forgiveness applications left by Department of Education of the previous administration
  • The White House has focused its executive actions on canceling loans for narrow groups of people who have been the victims of for-profit colleges’ proven criminality or government negligence
  • Promises to pass any kind of broad, universal loan relief have yet to materialize, though Biden is considering canceling $10,000 of federal debt per borrower before the midterms
  • Other proposals, such as canceling all debt or tweaking bankruptcy codes to include student debt remain long shots

In 2018 and 2020, many Democrats made some level of relief for the 40 million Americans collectively buckling under $1.75 trillion in student loan debt a critical plank of their campaigns.

These were implied and explicit promises that undoubtedly animated many younger voters, who face ever-growing college costs, and minority voters, who tend to need bigger loans given vast differences in generational wealth between races.

It is also an issue that broadly polls well, with even 57% of poll respondents who had not gone to college supporting partial or full student loan forgiveness.

Now in 2022, we take a look at the status of the various proposals out there, which include some narrow, but meaningful, accomplishments for specific categories of loan borrowers.

Under the Trump administration, no pending loan forgiveness applications were approved. The Biden administration has, on the other hand, canceled debt for borrowers at specific predatory for-profit universities on several occasions.

But younger voters say they want broader action to deal with an unprecedented student debt crisis that is largely unique to America in the industrialized world. However, the big promises to pass broad debt relief by various top Democrats have yet to show progress towards becoming law.

Overall Status of Student Loan Relief

The following table shows the acts of student loan relief undertaken or under consideration by the Biden administration or Democratic leadership.

Status of Student Loan Relief Actions

What Action When Implemented Number of Borrowers Affected How Much Money Involved
Canceled debt for former ITT Tech students 6/16/2021 18,000 $500 million
Canceled debt for former Corinthian students 6/1/2022 500,000 $5.8 billion
Began processing first tranche of "Borrower Defense" applications that were stalled under Trump 7/1/2021 73,000 $1 billion
Continued processing Borrower Defense applications for members of class action lawsuit against Trump Dept. of Ed. 6/23/2022 200,000 $6 billion
Began processing Public Service Loan Relief applications 6/1/2022 500,000 $6.2 billion
Continued deferring payments through pandemic 8/31/2022 43,000,000 $0
Canceling $10,000 public debt per borrower White House actively considering executive order after initially hoping Congress would pass legislation to this effect Zeroes out debt for 13,000,000; Will affect all 43,000,000 public borrowers to a degree
Canceling $50,000 public debt per borrower Majority Leader Sen. Chuck Schumer, Sen. Elizabeth Warren are leading the push for executive action; Speaker Nancy Pelosi, Pres. Biden say he lacks that authority Zeroes out debt for 30,000,000; Will affect all 43,000,000 public borrowers to a degree
Canceling 100% of private and public debt Independent Sen. Bernie Sanders is leading Democratic progressives who advocate for full student debt cancellation Will zero out debt for all 43 million public borrowers in addition to private borrowers $1.61 trillion in federal debt $131.1 billion in private debt $1.75 trillion in total
Changing bankruptcy rules to include student debt FRESH START Through Bankruptcy Act, introduced by Sen. Dick Durbin (D-IL) and cosponsored by John Cornyn (R-TX) has bipartisan support, but has yet to be voted out of the Judiciary Committee

Extending Pandemic Payment Freeze

Former President Trump initiated a freeze on student loan payments at the start of the pandemic in March 2020. An important aspect of the freeze was that no interest would accrue on the remaining balance while the borrower was not making payments.

This sets it apart from other temporary relief options, such as going into forbearance, where payments are paused for a fixed time but the loan balance grows as interest adds up.

Since coming into office, President Biden has extended the payment freeze several times, with the latest extension going at least through Aug. 31. The pandemic pay freeze has been extended six times since Trump initially pumped the brakes on loan repayments.

The Fed notes that 60% of borrowers made no payment towards these student loans during the more than two years since the payment and interest freeze took effect. The other 40% who made some payments will find themselves in a better position once the extension ends.

Processing "Borrower Defense" Claims

The Borrower Defense process is a way for a borrower to have some of their loans reduced or forgiven if the school lied about things like graduation rates, average graduate salaries, or other things.

During the Trump administration, tens of thousands of borrowers were eligible for some amount of relief under this process. But in the summer of 2019, Education Secretary Betsy DeVos changed the eligibility requirements, leaving these borrowers with stalled or denied applications. According to members of a class action lawsuit against Secretary DeVos, “the Department of Education halted all processing of borrower defense claims and refused to adjudicate any borrower defense from any student. As of 2019, more than 200,000 students had a borrower defense application pending. Many of them had been unresolved for nearly four years.”

Within six months of taking office, President Biden’s administration tackled the backlog of Borrower Defense applications and on July 1, 2021, forgave some or all of the loans of 73,000 borrowers, for a total of $1 billion in debt relief.

Most recently, on June 23, 2022, the Department of Education agreed to immediately cancel another $6 billion for 200,000 students of predatory colleges, as part of a settlement in a class action lawsuit against the Department of Education that goes back to the Trump administration.

Prior to that announcement, Biden’s gradual approach to canceling student loans had focused on two major universities.

Canceling Debt for Students at ITT Tech and Corinthian University

There are some specific examples of Biden unilaterally canceling millions or billions of dollars of debt at a time.

ITT Tech, which shut down in 2017 after the government pulled its federal funding, misled students about how much they could expect to earn after graduating and about the ability to transfer credits.

In arguably his first actual act of debt cancellation, in June of 2021, President Biden informed 18,000 “alumni” of ITT Tech that the entirety of their debt to the now-defunct business was canceled, amounting to a total of $500 million in loan forgiveness.

That may have been a dry run for one of his more recent acts of debt cancellation, an order of magnitude much larger than ITT Tech. A year later, Biden decided to go after another for-profit university that had conned borrowers. In June 2022, the Biden administration informed 100,000 former students of Corinthian University, another predatory institution that has since been shuttered, that their debt was entirely forgiven. The Corinthian relief program will eventually impact 500,000 borrowers as they are informed on a rolling basis.

For Corinthian borrowers, this amounts to a total of $5.8 billion of debt relief. It also showed Biden was willing to go much bigger than ITT Tech’s $500 million in loan relief and potentially look at relief in the billions of dollars for hundreds of thousands of borrowers.

At the same time though, it was not so different from the ITT Tech debt forgiveness because it targeted borrowers from a specific predatory for-profit institution.

However significant these accomplishments were, they were narrow in terms of who they affected and a far cry from the near-universal $10,000 debt cancellation Biden campaigned on.

Moving Stalled Applications for Public Service Loan Forgiveness Forward

The Public Service Loan Forgiveness (PSLF) program was established as part of the College Cost Reduction and Access Act, which Congress passed with bipartisan support and President George W. Bush signed into law in 2007.

Many of the problems that the broader 2007 legislation sought to address mirrortoday’s issues with college debt, suggesting that despite the law’s intention, it did not address some of the core issues that make student loans one of the most burdensome forms of American household debt.

It expanded Pell Grants for low-income borrowers and gradually cut interest rates on Stafford Loans in half, helping increase access to higher education for future student borrowers.

But one of the most discussed parts of the plan was the PSLF program, in part because it was a path to actual debt cancellation for past borrowers.

Under PSLF, if a borrower worked in a public service capacity and continued making on-time payments, the remainder of the federal debt was canceled after 10 years. Unfortunately, there was very little guidance in the actual legislation on which occupations or employers were eligible to meet the “public service” requirement.

In 2012, under President Barack Obama, the Department of Education finally created an Employer Certification Form that allows borrowers to find out if their current and past work as nurses, teachers, first responders, and similar public interest jobs qualified them for PSLF.

In 2017, a decade after the law’s passage, the first round of students who were eligible for the forgiveness program began filing applications with loan servicers and the DoE, now under the Trump administration. To their shock, 99% of their applications were denied, leading to the resignation of a student loan servicer watchdog.

In response, this year the Department of Education began informing up to 500,000 borrowers who had applied for PSLF since 2017 that their applications were now approved. Once all half a million borrowers have been fully approved for debt forgiveness, this move will account for a total of $6.2 billion in loan relief. That would be considered, in dollars and cents, Biden’s most ambitious attempt at debt relief.

Changing Bankruptcy Laws to Include Student Debt

Student debt is unique among debts in that it will stay with you even after a bankruptcy filing. Someone going through bankruptcy would have to prove that their student loans represented an “undue hardship,” which is open to broad interpretation and generally leaves a very high threshold for discharging student loans during bankruptcy.

Advocates have tried to change bankruptcy law for decades so student loans were treated like other forms of financial obligations, which could be discharged through bankruptcy.

Eventually, enough pressure was brought to bear on lawmakers that last fall a top Democrat wrote the legislation, which was promptly co-sponsored by a top Republican, that would reshape how student loans were treated in bankruptcy. The FRESH START Through Bankruptcy Act was introduced by Sen. Dick Durbin (D-IL) and co-sponsored by Sen. John Cornyn (R-TX), and members of both parties have voiced support. However, it has yet to be voted out of the Judiciary Committee. From there it will face the full Senate and will likely need at least 10 Republicans in addition to all 50 Democrats to overcome a potential filibuster.

This one-page description of FRESH START offers an overview of what the bill proposes:

  • Make Federal Student Loans eligible for discharge in a bankruptcy proceeding ten years after the first loan payment is due.
  • Retain the existing 'Undue Hardship' option for private student loans and for federal student loans that have been due for less than ten years.
  • Increase institutional accountability by creating provisions that require colleges with more than one-third of their students receiving federal student loans to partially refund the government if a student's loan is later discharged in bankruptcy.
  • Provide bankruptcy as an option for student borrowers who have no realistic path to pay back their overwhelming student loan debt to help them get back on their feet.

While this would drastically change how student debt is treated during bankruptcy proceedings, as of now it has only been introduced in one committee in one half of the legislature. We won’t know how viable the bill is until we start seeing some committee and full votes in the Senate and House.

Canceling $10,000 of Federal Student Debt Per Borrower

This is the promise most associated with President Biden, which he made during the 2020 primaries. Since then, the president has thrown doubt into whether he will follow through. For some time, he claimed that he does not have the legal power to do so by executive order.

Now, however, news outlets are reporting that the White House seems to have reassessed its views of executive power and that Biden is strongly considering canceling up to $10,000 of student debt per borrower within certain income brackets.

The plan is to limit forgiveness to borrowers earning less than $150,000 per year, or $300,000 for families. But while polls show some form of debt forgiveness is popular, once we get into the weeds of where to cap overall forgiveness amounts or what income limits should apply, opinions splinter, as shown in this Morning Consult poll published on June 8, 2022. Though there are strong majorities who support some level of debt cancellation, opinions differ on the details of how loan forgiveness should work.

First of all, only 35% of respondents believed no income group deserves this level of debt forgiveness. This leaves nearly two-thirds who either agree with the proposed income thresholds (29%) or think the income brackets are too high (13%) or too low (9%). On the whole, this recent poll tracks with other polls this year, with majorities or pluralities agreeing that a modest amount of forgiveness is appropriate within certain income limits.

President Biden may time the announcement of any broad loan forgiveness closer to the fall so it’s fresh on voters’ minds come Election Day. In any case, the present loan payment freeze extends through August.

Canceling $50,000 of Federal Student Debts Per Borrower

This is the number that Sen. Elizabeth Warren and Sen. Majority Leader Chuck Schumer believe Democrats should push for. Biden has pushed back, suggesting it could damage banks or hurt future lending for student loans. Progressives, meanwhile, suggest that anything less could be construed as a broken campaign promise and will fail to animate the Democratic base for the coming midterms.

The White House argues that it does not have the executive power to cancel such a large amount of debt. Skeptics push back that if the administration believes it has the authority to cancel $10,000, why does that authority suddenly disappear at $50,000?

Senator Warren, in fact, asked the Legal Services Center atHarvard Law if current law allowed the president to instruct their Education Secretary “to cancel federal student loan debt on a broad or categorical basis.”

They concluded “that such broad or categorical debt cancellation would be a lawful and permissible exercise of the Secretary’s authority under existing law.”

The matter remains unresolved legally, and since it seems that President Biden does not have an appetite for this level of relief, it would require a legislative solution, which remains unlikely.

Canceling 100% of All Public and Private Student Debt

Senator Bernie Sanders (I-VT) is at the forefront of calls to cancel all student debt, public and private. This is a highly unlikely path, though other progressives such as Congresswoman Alexandria Ocasio Cortez do support it.

As the White House continues to cancel bits of debt here and there, and hint that it is open to a broad debt relief, the idea of going all the way and canceling all debt is unlikely to gain traction.

What Will Biden Push For?

President Biden’s administration has made remarkable strides in rectifying some of the most egregious shortcomings of the student loan industry. But some organizations such as Defend Students do not think these measures go far enough, producing a memo outlining what the government can do within its current powers.

The White House is most likely to address some, but not all, of the borrowers’ demands for a system that is more forgiving and fair. It will do something about this uniquely American problem, such as the broad forgiveness of $10,000 per person. But it may not be enough for the young voters in the Democratic coalition. Some are likely to feel let down.

This leaves an open question of whether youth and minority voters can muster the enthusiasm to rally during the midterms for candidates who have failed to move the ball on a critical issue for these key demographic groups.

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