Biden Administration announces another round of student loan forgiveness—wiping out $1.3 billion
On Monday, the U.S. Department of Education declared it will permanently discharge student loan debt held by Americans with permanent disabilities.
The announcement wipes out student loan balances totaling $1.3 billion held by around 41,000 permanently disabled Americans whose debts were previously reinstated. The government provides debt relief to Americans with permanent disabilities, however, these 41,000 borrowers got their balances reinstated as a result of either having their incomes rise too high or failing to submit annual documentation. Around 98% of reinstated loans fall into the latter category—something that the Department of Education cited Monday as reason for doing this permanent discharge.
“Borrowers with total and permanent disabilities should focus on their wellbeing, not put their health on the line to submit earnings information during the COVID-19 emergency,” wrote Education Secretary Miguel Cardona in a statement announcing the forgiveness. “Waiving these requirements will ensure no borrower who is totally and permanently disabled risks having to repay their loans simply because they could not submit paperwork.”
The move comes just two weeks after the Department of Education announced it will forgive student loan debt for borrowers who attended colleges that used deceptive or predatory practices. That wiped out more than $1 billion in debt held by around 72,000 borrowers who attended now defunct for-profit colleges like ITT Technical Institute and Corinthian Colleges. In addition, the passage of the $1.9 trillion economic aid package earlier this month extended the pause on student loan interest, payments, and collections on most federal student loans through Sept. 30.
In the grand scheme of things, these two rounds of student loan forgiveness ($1 billion and $1.3 billion) are relatively small compared to the $1.7 trillion total outstanding student loan debt. More than $1.4 trillion of that total is federal student loan debt.
The swift move to forgive student loan debts under the Biden administration does raise the question: Is broader forgiveness is on the way? If it does come, don’t expect a full wipe-out. Biden has stated he’s opposed to doing student loan forgiveness over $50,000 through executive order, instead he prefers Congress to pass legislation granting $10,000 in forgiveness per borrower.
It isn’t just progressive activists who are pressuring Biden to act: Last week Sen. Bob Menendez (D-N.J.) pushed for big action when he tweeted: “This is just the beginning. Let’s go bigger and cancel up to $50,000 for all federal student loan borrowers!”