After Supreme Court ruling, Biden cancels student loan debt for millions of borrowers (2024)

Geoff Bennett:

President Biden today announced another $5 billion in student loan forgiveness for 74,000 borrowers. It's the latest batch of student debt cancellations after the U.S. Supreme Court struck down his larger forgiveness plan last year.

John Yang has our update on the president's efforts.

John Yang:

Geoff, today's move will provide relief to nurses, teachers and other public service employees who have been working for at least 10 years. It also includes forgiveness for some borrowers who have been making loan repayments for 20 years, but never got the relief they were entitled to under existing programs.

And earlier this week, the administration said it will move up the start date of a new student loan repayment program from July to February. So far, the Biden administration says it's erased more than $130 billion in loans for 3.7 million borrowers.

Danielle Douglas-Gabriel covers the economics of higher education for The Washington Post.

Danielle, two announcements today, one a program for public service workers, another for people who have been repaying their student loans for 20 years, but haven't gotten the benefits that they were entitled to. How does that work?

Danielle Douglas-Gabriel, The Washington Post:

Sure.

So, since the late 90s, there have been what are known as income-driven repayment programs. These are programs that allow you to pay based on your — a portion of your discretionary earnings. This is supposed to allow you to have more affordable payments, make it easier for folks to manage their loans.

Now, the promise as a part of these programs is, after 20 or 25 years of payments, you can get forgiveness for whatever your balance is on these loans. Unfortunately, the Education Department for many years weren't keeping count of how many people actually were making payments on those loans during that time.

So there were hundreds of thousands of people for whom they'd been in payment for 20, 25, many more years than that and never received this benefit. So, the Biden administration came in and said, we're going to play cleanup, essentially. They extended these initiatives that made it a lot easier for people who had been paying for decades to have their loan forgiveness.

And the news of this today is what we're seeing as a result of this effort.

John Yang:

And also the program that they're moving up the start date from July to February, what does it do and how significant is it?

Danielle Douglas-Gabriel:

This is all rooted in Biden's latest repayment plan, commonly known as SAVE.

And one of the cool features of this plan is that, if you borrowed less than $12,000 originally and had been making payments for 10 years, whatever your remaining balance is would be forgiven. So the Department of Education was supposed to put that particular feature into effect in July, but they were able to move it up to February.

They are not certain exactly how many people will benefit from this, but do keep in mind, there are a lot of people who borrowed less than $10,000 who owe far more than that because of the way interest accumulated on their loans. And a lot of those people tend to be at the center of where we see the most pain in student loan repayments, meaning the people who default the most, people who are delinquent on their loans, oftentimes because they started college, never finished and got the credential needed to get the kind of work to make it easy to repay the debt.

John Yang:

Talk about the pain of student loans. This is an election year. Polls show that voters under 45 think this is a big issue. Student loan forgiveness is a big issue. And they also feel that Biden isn't doing enough.

Is this piecemeal approach that the president's taking now that the Supreme Court struck down his bigger program, is this enough for borrowers? Are they satisfied with this?

Danielle Douglas-Gabriel:

We're not seeing that, which I find striking, right?

I mean, relative to any other administration in recent history, this administration has forgiven the most amount of student debt. But because of the failed promise of this widespread debt relief that would have touched 40 million people, a lot of borrowers still aren't fully satisfied.

Certainly, the ones who are benefiting from these incremental approaches, they're pretty happy right now, because they don't have to make payments on their loans. But for the vast majority, they're still trying to push for something that may not quite happen. I mean, to be fair, the Biden administration is still fighting for more expansive loan forgiveness through this negotiated rulemaking process that's still under way.

But it's not what folks were hoping for. And it's certainly not what he — I think many people thought he could have delivered.

John Yang:

We go from loan repayment to getting the student loans.

The Biden administration also rolled out the new Free Application for Federal Student Aid, also known as FAFSA. They did that at the beginning of the year. How's it going?

Danielle Douglas-Gabriel:

A lot better than it started. I think we have more than a million people now who have submitted FAFSAs, which is great. A lot of the technical troubles that people experienced on January 1, December 31 have largely dissipated, from what I'm hearing from folks on the ground.

But there are still some technical issues that some applicants are facing when their parents try to get a FAFSA I.D., especially if they don't have Social Security numbers. This was a feature that was supposed to make it easier for a wider swathe of folks, but it hasn't fully worked out, from what I'm hearing.

I think the challenge is, filling out the form is one step. There are other steps along the way, and all of those delays, it kind of has a domino effect. And so a lot of folks in financial aid are waiting to see how this plays out.

John Yang:

And financial aid has to decide what they can offer students, and students have to figure out where they can afford to go.

But this is getting pushed back?

Danielle Douglas-Gabriel:

Yes, so here's the trouble, is that the department — while everyone can submit their application now, the department may not be able to actually provide colleges that information and that data until the end of this month, if not potentially later.

And that creates a much shorter timeline for financial aid officers at schools to be able to provide award packages. It also creates the complication of missing potential state and other outside scholarship deadlines that require the FAFSA in order to apply for that money.

So everyone is really nervous about, how will students and families be able to get this information to make an educated decision about where to go, where they can afford to go, if we have this shorter timeline?

John Yang:

Danielle Douglas-Gabriel of The Washington Post, thank you very much.

Danielle Douglas-Gabriel:

Thank you.