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President Biden cancels $1 billion in student loan debt

March 18, 2021, 9:32 PM UTC

Seventy-two thousand student loan borrowers could breathe a sigh of relief Thursday, after the Department of Education announced they will have the entirety of their debt forgiven.

The move only applies to borrowers whose claims have already been approved under something called borrower defense to repayment, a federal law that allows students to have their loans cancelled if they attended a school that closed suddenly or was proven to take part in illegal or deceptive practices, such as ITT Technical Institute or Corinthian Colleges. The law was bolstered by the Obama administration in 2016.

Under President Trump, however, then-Secretary of Education Betsy DeVos made it harder for such students to have their debts forgiven. DeVos said the law was too generous to student loan borrowers and too costly for taxpayers. 

The 72,000 student loan borrowers impacted by the Department of Education’s announcement already received partial loan forgiveness while the Trump Administration was still in office. Now, those loans will be fully forgiven.

Thursday’s action is another rollback of Trump-era laws and regulations by President Biden. 

Officials in the Biden administration said the DeVos-led formula to cancel student loans in cases of deception or abrupt school closure made it unfairly difficult for borrowers. 

“Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution’s misconduct,” said Secretary of Education Miguel Cardona in a statement. “A close review of these claims and the associated evidence showed these borrowers have been harmed and we will grant them a fresh start from their debt.”

Forgiving student debt has become a major point of debate among leading Democrats. On Monday, Democrats of both chambers of Congress—including Senate Majority Leader Chuck Schumer, D-N.Y., and former Democratic presidential candidate Elizabeth Warren, D-MA.—urged President Biden to issue executive orders canceling up to $50,000 in student debt, citing a provision in the recent Covid-19 relief stimulus package that made student loan forgiveness tax-free until 2025. 

While President Biden has yet to budge, his action Thursday is likely just the first of many moves regarding the borrower defense to repayment law. The Department of Education said they also plan on further addressing the borrower defense application process and will pursue re-regulation.

And it’s not the first move Biden has made to help ease the burden on the 44.7 million Americans who owe student loans totaling over $1.7 trillion. In January, Biden signed an executive order extending the payment pause on federal student loans until October because of the pandemic. The next month, he urged Congress to include the cancelation of an additional $10,000 of federal student loan debt in pandemic relief measures. 

Other moves regarding student loan forgiveness, including wide-scale loan cancellation, may still come but it likely won’t happen anytime soon. Democratic leaders are in favor, but a student loan forgiveness plan is yet to make it through either the Democratic-controlled House or Senate.