Biden administration moves to ease student loan debt burden

Hill Democrats continue to press for more loan forgiveness

Education Secretary Miguel Cardona is announcing student loan changes. (Susan Walsh/AP/Pool file photo)
Education Secretary Miguel Cardona is announcing student loan changes. (Susan Walsh/AP/Pool file photo)
Posted April 19, 2022 at 3:02pm

The Biden administration is taking further steps to ease the burden of student loans, but new actions announced Tuesday were well short of what many Democrats want to see.

The Education Department is estimating that the action will provide "immediate debt cancellation for at least 40,000 borrowers" who work in public service careers and have taken part in a program that is supposed to forgive loans after 120 qualifying monthly payments.

The changes "will begin to remedy years of administrative failures that effectively denied the promise of loan forgiveness" to borrowers, Education Secretary Miguel Cardona said in a statement.

"These actions once again demonstrate the Biden-Harris administration’s commitment to delivering meaningful debt relief and ensuring federal student loan programs are administered fairly and effectively,” Cardona said.

The announcements include changes to the implementation of the income-driven repayment option, known as IDR. The Education Department plans to make a one-time adjustment to count months of long-term forbearance toward qualifying months for the purposes of repayment under both the public service program and income-driven repayment.

Borrowers may get forbearance, or a temporary suspension in payments, from their loan servicer for reasons such as medical expenses, a change in employment or financial difficulties.

The income-based programs deem accounts forgiven after 20 or 25 years of repayment, depending on the circumstances, even if there's a balance due. By counting months in long-term forbearance (more than 12 consecutive months or 36 months overall) the Biden administration says it is part of a broader effort to use existing regulatory authorities to correct past administrative concerns.

"Fifteen months ago, the Public Service Loan Forgiveness Program denied the vast majority of applicants for having the wrong type of loan, the wrong repayment plan or many other technical or obscure reasons, we had only forgiven about 8,000 loans in the history of the program. We've now forgiven more than 110,000," Undersecretary of Education James Kvaal told reporters. "Fifteen months ago, borrowers with total and permanent disabilities were eligible for loan forgiveness, but most did not receive it. We've now canceled more than 350,000 of these loans."

Senate Health Education, Labor and Pensions Chair Patty Murray, D-Wash., praised Tuesday's actions.

“I pushed hard for the Administration to address the harm these failures have caused, and I’m relieved that today they heeded my call to finally accurately count payments borrowers have made over decades — which will provide immediate debt relief for thousands and bring millions more closer to relief — and crack down on servicers wrongly steering borrowers towards forbearance instead of putting them on a path to relief," Murray said in a statement. "This is going to make a huge difference in the lives of so many borrowers in Washington state and across the country, and it’s an urgently-needed step in the right direction."

A Democratic coalition on Capitol Hill has continued to push the White House to cancel student loan debt more broadly, and for the administration to go beyond the repeated pauses in repayments implemented in response to the COVID-19 pandemic.

"While the extension is welcome, a looming restart of student loan payments in September underscores the importance of swift executive action on meaningful student debt cancellation. We continue to implore the President to use his clear legal authority to cancel student debt, which will help narrow the racial wealth gap, boost our economic recovery, and demonstrate that this government is fighting for the people,” Senate Majority Leader Charles E. Schumer of New York, Sen. Elizabeth Warren, D-Mass., Rep. Ayanna S. Pressley, D-Mass., and a larger group of House and Senate Democrats said in an April 6 statement.

When asked about the prospects for student debt cancellation, White House Press Secretary Jen Psaki has generally pointed to an ongoing legal review and stressed that President Joe Biden would sign a bill cancelling $10,000 in student loan debt if such a measure were to reach his desk. Psaki has also said that further executive action remains a possibility.

"We are working really, really hard ... where there's clear authority for us to help borrowers," Kvaal said when asked Tuesday about possibly going much further. "Every day, we're engaged in conversations about how to make these programs work better, and how to get the borrowers the relief that they're entitled to."