Nearly 616,000 public-sector employees had their student loan debts forgiven after President Joe Biden’s administration temporarily loosened the rules on the Public Service Loan Forgiveness (PSLF) program beginning in October 2021, according to the U.S. Department of Education (DOE).
The agency
stated that a total of $42 billion in loans have been forgiven under the Biden-era PSLF rules—a total that represents about $68,000 worth of loans forgiven for each of the public-sector employees involved. Some 610,000 people already have had their student loans discharged, while another 6,000 will soon see their student debt erased.
The PSLF program normally allows for the forgiveness of all student loans after a 10-year period of qualifying public sector employment—as long as the public sector employee made their monthly payments through a qualifying loan repayment plan. The temporary Biden-era PSLF
rules allowed for previously ineligible loan types and payment plans to count toward the 10 years of loan payments needed to qualify for full loan forgiveness through the program.
The temporary rules allowed public sector employees to apply for a PSLF waiver until October of last year.
Only about 7,000 public sector employees had qualified for loan forgiveness under the PSLF program prior to the Biden administration’s rule change.
“These changes are important steps toward a better and stronger PSLF program, one that will move away from the current situation in which too few borrowers receive forgiveness, and too many do not receive credit for years of payments they made because of complicated eligibility rules, servicing errors, or other technicalities,” the Education Department stated in October 2021.
On May 8,
Education Secretary Miguel Cardona credited the Biden administration with working to “fix a broken student loan system,” including through its temporary changes to the PSLF program.
“The difference that Public Service Loan Forgiveness is making in the lives of hundreds of thousands of Americans reminds us why we must continue doing everything we can to fight for borrowers and why families cannot afford to have progress derailed by partisan politicians,” Cardona said.
Biden’s Student Loan Plans
The temporary expansion of PSLF eligibility is part of a broader effort by the Biden administration to wipe out student loan debt. In total, the Biden administration has taken credit for $66 billion in targeted loan relief to about 2.2 million borrowers.In addition to the $42 billion in student aid through the temporary PSLF eligibility rules, the administration has approved $9.1 billion in relief for 425,000 borrowers who have a total and permanent disability. Another $14.5 billion in borrower defense claims have been approved for about 1.1 million borrowers who argued that their schools cheated them out of their promised education.
The White House has also provided another $1.26 billion in loan discharges to 107,000 borrowers who attended the now-defunct ITT Technical Institute.
Another Biden administration plan calls for
forgiving up to $20,000 in federal student loans for individuals earning less than $125,000 per year and families earning less than $250,000 per year. About 43 million people may be eligible for Biden’s debt forgiveness plan. The DOE has
estimated that the plan would cost about $300 billion over 10 years, while the Congressional Budget Office (CBO)
estimated that it'll cost about $400 billion over the same time period.
The Biden administration has
argued that student loan debt is a “lifelong burden” and that federal debt forgiveness is needed to alleviate this burden. His administration has argued that the plan would also help address wealth inequality and “advance racial equity” by alleviating a disparity between black and white students.
Criticism
Critics have attacked Biden’s student debt forgiveness plan on multiple fronts.
Some detractors have argued that the plan punishes those who saved for college, worked through their time in school, and pursued less extravagant higher education. The Committee for a Responsible Federal Budget has
said that “student debt cancellation is regressive and disproportionately benefits those with advanced degrees who are much less likely to be unemployed compared to those with less education.”
The conservative Heritage Foundation has
predicted that canceling student debts will just lead colleges to increase their tuition rates—because students will have more access to funding.
The Biden administration’s student debt forgiveness plan also faces legal challenges, with critics saying Biden lacks the legal authority to excuse debts. The debt relief plan is currently on hold while the U.S. Supreme Court
weighs the legality of the program.
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