While widespread student loan forgiveness hasn’t yet become a reality, some U.S. borrowers have already received some debt relief. Roughly 1.3 million borrowers have seen $25 billion in student debt forgiveness since President Biden took office.
The Department of Education has announced it will discharge the outstanding federal student loans of former Corinthian Colleges students after the school faced multiple investigations and was accused of defrauding students out of millions in federally backed loans. In total, $5.8 billion in loans will be canceled for 560,000 borrowers, making it the largest single-loan discharged by the Education Department.
Here is a breakdown of student debt cancelation already approved by the Biden administration.
Borrowers defrauded by their school
According to the Education Department, roughly 690,000 borrowers have had a total of $7.9 billion in student loans canceled through discharges due to borrower defense and school closures, like the group discharge for Corinthian Colleges students.
In April, the department announced the discharge of $238 million in student loans for 28,000 borrowers who attended Marinello Schools of Beauty between 2009 and its closure in February 2016. During those seven years, the school is accused of harming these borrowers with “pervasive and widespread misconduct.”
Other borrowers receiving debt relief after being defrauded by their school include former students of DeVry University, ITT Technical Institute’s nursing program, Westwood College, and the Minnesota School of Business/Globe University’s criminal justice programs.
Borrowers with total & permanent disability
Over 400,000 borrowers have received more than $8.5 billion in debt forgiveness through total and permanent disability discharge under the Biden administration.
In August, over 323,000 borrowers were awarded more than $5.8 billion in automatic student loan discharges under a new regulation by the Education Department. To identify eligible borrowers, officials used existing data from the Social Security Administration.
Through that data matching, Federal Student Aid COO Richard Cordray said in April that approximately 15,000 to 20,000 newly eligible borrowers will have their loans discharged each quarter.
In total, more than 113,000 borrowers have received $6.8 billion in debt cancelation “through improvements to PSLF (Public Service Loan Forgiveness)” under the Biden administration, according to the Education Department.
Last October, an overhaul of the PSLF program was expected to result in 22,000 borrowers with consolidated loans immediately seeing $1.74 billion in forgiveness without additional action. At the same time, the Education Department said another 27,000 borrowers could qualify for $2.82 billion in forgiveness if they were able to “certify additional periods of employment.”
Relief through student debt cancellation will help workers
By the end of 2021, the Biden administration said more than 70,000 borrowers were able to qualify for close to $5 billion in federal student loan forgiveness because of changes made to the PSLF program.
In April, the Biden administration announced new actions by the Department of Education to “fix longstanding failures in the student loan programs.” An estimated 40,000 borrowers became eligible for “immediate debt cancellation” as they now qualify for the PSLF under the new changes.
What about widespread student loan forgiveness?
The White House has indicated that it is nearing a decision on broad student loan debt forgiveness, zeroing in on canceling $10,000 per borrower, but has not said that a decision is finalized. President Biden has already confirmed he “is not considering $50,000 debt reduction.”
The Federal Reserve’s analysis found forgiving $10,000 per borrower would result in roughly 11.8 million borrowers – slightly more than 31% – having their entire balance eliminated. If the Biden administration were to move forward under this plan, an estimated $321 billion in federal student loans would be forgiven.
How much student loan forgiveness you receive could be dependent on how much you make. Sources tell The Washington Post that relief could be limited to those who make less than $125,000 or $150,000 per individual tax filers or $250,000 or $300,000 for couples who file together. Forgiveness could also be restricted to loans used for undergraduate education, excluding programs in medicine and law, for example, that require additional schooling.
60 percent of student loan borrowers made no payments during the pandemic freeze
The Education Department has also confirmed it is “working on new regulations that will permanently improve a variety of the existing student loan relief programs, significantly reduce monthly payments, and provide greater protections for students and taxpayers against unaffordable debts.”
The student loan payment moratorium, first enacted by then-President Trump in 2020, has been extended through August.
(Courtesy: The Hill)