Biden approves final student loan relief, forgiving $600 million in debt

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At the end of his term, President Joe Biden concluded a turbulent effort to provide extensive student loan forgiveness by forgiving another $600 million in education debt for people who had attended college for a long time and for those who were deceived by their colleges.

This president has aimed to ease the financial burdens of more Americans than any other president in the past. However, experts specializing in higher education are divided as to whether his efforts to reduce debt for millions of people have ultimately caused more problems than they have solved. Many of President Biden's comprehensive debt relief initiatives have been blocked by courts or bogged down in lawsuits that have further confused the already complicated student loan repayment system. Despite this, his relentless pursuit of debt forgiveness, primarily through existing federal programs, has aided millions of individuals.

“Four years ago, President Biden pledged to reform a flawed student loan system. We got to work and, in collaboration, we repaired existing programs that had fallen short of providing the relief they had promised," Education Secretary Miguel Cardona said Thursday.

The Education Department announced three rounds of student loan forgiveness last week before President Biden left office. On Monday, the department canceled loans for about 150,000 borrowers mainly through a 1994 law called "borrower defense to repayment." This law lets the agency cancel federal student loans if colleges violate students' rights and state laws. Most of these cancellations were for students who attended former schools owned by Center for Excellence in Higher Education, including Stevens-Henager College, Independence University, and California College San Diego.

Program that clears balances for individuals who spend 10 years servicing their loans while working for the government or a nonprofit organization. The Biden administration relaxed the program's strict rules in 2022, making it easier for about hundreds of thousands of borrowers to have their loans forgiven.

"My Administration has taken groundbreaking steps to ease the financial burden of student loans, punished those who have taken advantage of students, and stood up for students across the country," Biden said on Monday.

By next Wednesday, the Education Department will have approved an additional 261,000 borrowers who attended Ashford University, a former for-profit school, for loan cancellation under the borrower defense statute.

The waiver provides borrowers with credit towards loan forgiveness to fix inconsistencies in how student loan servicers have handled and recorded payments.

Programs like Public Service Loan Forgiveness have fallen short in providing much-needed relief to borrowers who invested years in paying off their debts, but President Biden's waiver has shown some success.

In a historic milestone, the federal loan program has lived up to its promise to all over 5 million student loan borrowers for the first time in the student loan system's history," said Persis Yu, deputy executive director at the Student Borrower Protection Center (SBPC), an advocacy group, adding that "for the first time, this administration has finally acknowledged that the student loan system is fundamentally flawed.

President Biden's primary proposal to erase up to $20,000 in student loans for approximately 40 million individuals.

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This new plan subsidizes student loan payments by tying them to one's income and family size. This plan gets people out of debt faster. For those who borrowed less than $12,000, debt forgiveness can occur in 10 years - that's 10 years less than it takes for such borrowers on other income-based repayment plans.

The federal Pell grant program has been paused and the Education Department has stopped making payments to the approximately 8 million people signed up for the plan, and they will not receive credit towards loan forgiveness during the period of forbearance.

It's uncertain what President-elect Donald Trump's administration plans to do about those who are currently enrolled in the program. However, reverting them to older, less lenient repayment plans would be a complicated process for student loan servicers and may lead to legal disputes.

Some people are concerned that the push for widespread debt forgiveness will make it hard to pass bipartisan student loan reform laws because the issue is becoming increasingly divided along party lines in Congress. Through the many debates and proposals about canceling student loans and offering debt relief, Republicans have become more skeptical of what many see as a lavishly generous handout to college graduates coming at the expense of taxpayers.

House Education and the Workforce Committee Chairman Tim Walberg (R-Michigan) accused the Biden administration of handing out "handouts with no accountability"

It would have been better if the administration had focused on addressing the fact that student loan debt is too high, graduation rates are too low, and far too many students are left in a worse financial situation after paying for college than if they had never attended in the first place," Walberg said on Monday. "It's shameful that, in its final days, the Biden-Harris administration is doubling down on a plan to issue as much debt forgiveness as possible, again disregarding the law.

Through the federal budget reconciliation process, including a proposal to eliminate the Plus loan programs for graduate students and parents, for loan relief.

For his part, Trump has called Biden's student loan forgiveness policies "vile," but has not proposed any alternatives.

The representative at the US Department of Education’s Student Borrower Protection Center said she is “very concerned” about what another Trump administration term will mean for borrowers.

"The previous Trump administration turned a blind eye when students' and borrowers' rights were ignored - consistently backing predatory schools and lenders. With all the turmoil in the student loan system right now, borrowers have a lot at stake," she said.