Biden Admin to cancel another $1.2 billion in student loan debt
On July 18, the Biden administration announced it would cancel $1.2 billion in federal student loan debt for 35,000 workers, a move that could help the president shore up support ahead of the November elections.
Education Secretary Miguel Cardona said the latest measures reflect the government’s “historic efforts to reduce the burden of student debt—making needed and long overdue improvements to the Public Service Loan Forgiveness program,” or PSLF.
The latest round of debt relief was made possible thanks to fixes to the PSLF program. In 2023, the Department of Education announced that PSLF applications can be completed completely online, eliminating processing delays and confusion about who’s eligible for debt relief.
Established in 2007, the PSLF program allows certain public sector and nonprofit employees to have their federal student loans erased after 10 years of payments.
Before the online tool was developed, borrowers had a harder time verifying which employers allowed them to qualify for debt relief under PSLF.
According to the Department of Education, the Biden administration has now erased $69.2 billion in student debt for 964,000 borrowers under PSLF. Before Biden took office, only 7,000 borrowers were relieved of their debts under the program.
The Creditnews real-time student debt tracker shows that more than $160 billion in total student loan debt has been forgiven in Biden’s tenure.
Have voters noticed student debt relief?
In a recent Bankrate survey, nearly one in five Americans said student debt will have a major influence over their presidential vote in November. That’s despite just 16% of adults carrying student debt as of 2024, based on Census Bureau and Federal Student Aid data.
The problem is that many voters may not have noticed the massive debt relief the Biden administration is extending.
For many borrowers, student loan payments have become a major financial burden since 2023, when the federal government ended its Covid-era forbearance program. In the first month after student loan payments resumed late last year, 9 million borrowers failed to settle their bills.
As The New York Times reported, by the end of March, nearly 19 million borrowers still weren’t making payments. Their accounts were either delinquent, in default, or still on pause.
“The nonpayment rate really is emblematic of a system that’s not doing its job,” Persis Yu of the Student Borrower Protection Center said in an interview with the Times.
As Creditnews reported, many borrowers are refusing to make payments because they expect the government to forgive their loans. It’s basically a “massive student debt strike,” according to activists with the Debt Collective, a union that advocates for debtors.
They may be in for a rude awakening if Donald Trump retakes the White House.
“Trump will undo President Biden’s student loan forgiveness proposals,” higher education expert Mark Kanrtowitz told CNBC.
Trump’s pick for vice president, Senator JD Vance, wrote in 2022 that the GOP must resist “with every ounce of our energy and power” any attempt to erase student loans.