Biden-Harris Administration Delivers on Student Loan Forgiveness, Despite Hostile Courts
The Biden-Harris Administration’s first attempt at student debt forgiveness for 40 million Americans was struck down by a shocking and lawless Supreme Court decision that will likely upend the US Constitution’s Article III principle of standing in practice. (Republican-led states were suing on behalf of a loan servicer, MOHELA, that had the power to sue but didn’t want to; the attorneys general had to obtain documents to make a case of alleged harm using public records laws.) The Administration’s second attempt at delivering this relief, under a different law, is now making its way through the courts.
In the meantime, the Biden-Harris Administration implemented a new income-driven repayment plan called SAVE. Those who enroll will never experience the horror of making regular payments while seeing the amount owed go up. The payment amount is $0 for single borrowers earning less than $32,800 per year and for borrowers in a family of four making under $67,500; borrowers making non-zero payments save an average of $117 per month. The remaining debt will be forgiven for SAVE enrollees after as few as 10 years of making payments.
And the Biden-Harris Administration has fixed existing programs for loan forgiveness.
In 2016, President Obama enacted new rules cracking down on fraudulent business practices of for-profit universities that use public money to trap students in debt without providing a quality education. He also amended the Borrower Defense to Repayment program to provide debt relief to defrauded students. Just as these borrowers started seeing relief, President Trump secured an Electoral College victory in 2016, sending the stock prices of for-profit scam universities soaring. Trump installed public school privatizer Betsy DeVos as Secretary of Education. She repealed Obama's protections, subverted the law, and overruled Department of Education staff to prevent defrauded students from accessing the relief they are entitled to and badly need.
The dire debt situation is directly tied to the Great Recession of 2008, which the US didn’t recover from until the Biden era. Much of that recovery is due to Democrats' massive fiscal stimulus, which brought growth and jobs back to the pre-2008 trajectory, as "frying pan" charts indicate. In the 2010s, many young workers, particularly women of color, struggled in the post-recession economy, as continued stimulus was blocked by a Republican Congress. Scam universities preyed on their position. Facing professional roadblocks, many students enrolled in schools that did not advance their careers but did saddle them with debt. For DeVos, the cruelty was the point.
When President Biden named Miguel Cardona, a former public school teacher and principal, as Secretary of Education, debt-relief policy immediately changed. As new standards are being set to apply to for-profit universities seeking federal student aid, the Biden-Harris Administration is automatically forgiving staggering sums of debt for students ripped off by for-profit colleges, with no paperwork needed from the student. $5.8 billion of this relief came out of an investigation into Corinthian Colleges launched by Vice President Harris when she was the Attorney General of California.
A similar story can be told about the Public Service Loan Forgiveness (PSLF) program. Since 2021, $62.5 billion has been forgiven for 871,000 borrowers who work for eligible employers, such as a government or nonprofit entity, through this program. Before the Biden-Harris Administration, a mere 7,000 people had seen their debt forgiven through PSLF—amounting to a denial rate of 98.5%—due to enormous complexity and bad administration. Many people did not get any credit toward forgiveness for years of payment because their automatic payments were one penny short due to software rounding.
When we elect Democrats, we elect a coalition of people who are dedicated to making the government work to make people’s lives better.