President Joe Biden’s ambitious effort to cancel over $400 billion of student loan debt was struck down by the Supreme Court in June. But since then, the administration has more quietly managed to cancel $48 billion of debt by cleaning up and adjusting forgiveness plans that already existed, according to CNN.
It’s a reminder of how poorly the federal government has designed and implemented student loan forgiveness programs in the past — and how much more effective they can be when the government prioritizes making them work for borrowers. As CNN notes, since taking office Biden has managed to discharge $127 billion for nearly 3.6 million people — more than any previous administration.
For many years student loan forgiveness programs have not worked nearly as well as they were supposed to.
Part of this has been achieved through what the Biden administration has referred to as “the correction of past administrative failures” tied to existing student debt relief programs. Forgiveness programs like the Income-driven Repayment Plan (IDR) and the Public Service Loan Forgiveness (PSLF) program are designed to discharge the debts of eligible borrowers after making qualifying payments for a certain number of years. In the case of IDR, borrowers’ payments are tied to their income and need to be made for at least 20 years; in the case of the PSLF, borrowers qualify based on their employment in government or a range of not-for-profit organizations and making qualifying payments for at least 10 years. The point of these programs is to relieve responsible borrowers of potentially insurmountable debt, either based on their earnings or career path — as well as to prevent public servants from shying away from their jobs out of fear of endless debt.
But for many years student loan forgiveness programs have not worked nearly as well as they were supposed to. As Jared Bass, a senior vice president of education at the Center for American Progress, explained to me, a lot of different things fall under the bucket of “administrative failures.” Loan servicers — the companies contracted to collect loans on behalf of the government — were not giving accurate information to borrowers about their eligibility. Servicers were also not keeping accurate counts of qualifying payments, and different servicers used different definitions of what qualified in the first place. Servicers also pushed borrowers experiencing financial hardship toward programs that benefited the loan servicer rather than relief programs that would’ve benefited the borrower.
The Government Accountability Office (GAO) has also criticized the Education Department for the way it has dealt with the servicers, pointing out that the department has given servicers “fragmented” and “piecemeal” information on how to process certification requests and relief applications, and has failed to give servicers clear information on which employers qualify under PSLF. Moreover, the GAO has criticized the Education Department for doing a poor job of maintaining data on who is and isn’t eligible for IDR, which in turn has made it difficult to know how many borrowers have missed out on relief for which they may be eligible. Suffice it to say that there are a lot of different ways in which forgiveness programs lacked clarity and coordination. It has come at the expense of borrowers.
One wake-up call came around 2017 when, 10 years after the PSLF program was implemented, just a tiny fraction of borrowers who submitted a loan forgiveness application had gotten their debt discharged. “A lot of borrowers had followed the rules — or followed the rules that had been expressed to them — but had not received their forgiveness that they were entitled to, or the forgiveness they were promised,” Bass told me.
The Biden administration has revisited borrower payment counts to compensate for this crisis of poor information and administration, and it has changed the standards for what counts as a qualifying payment (payments that weren’t counted previously have now been counted). Moreover, in some cases in which the administration found that servicers inappropriately advised borrowers to take forbearance programs instead of income-based repayment plans, borrowers will also see relief. Biden also temporarily expanded eligibility for the PSLF through a waiver program, and also made it easier for borrowers with a disability to get debt relief by reducing the burden of paperwork they have to submit.
While Biden may not get the sweeping student debt relief that he had hoped for, these efforts are also worthwhile. They illustrate how insufficient it is for a social service merely to exist, and just how essential it is for it to be well-designed. It’s also likely a sign of how the Biden administration is striving to mitigate the political fallout from having its major debt relief initiative swatted down. It’s a shame that it took so much time — and so many policy failures — to get here. But a move toward simpler, clearer and more generous loan forgiveness plans is certainly a positive development.
