When the U.S. Supreme Court blocked President Joe Biden’s widespread student loan forgiveness plan earlier this year, it seemed like a death knell for much-anticipated relief for many borrowers. But the president’s administration has been slowly canceling over 100 billion dollars in debt for millions of borrowers through smaller, more targeted efforts.
To date, the Biden administration has approved an unprecedented $132 billion in debt forgiveness for over 3.6 million Americans. The forgiveness stems from a variety of actions, including balances for borrowers who are disabled or who were defrauded by their institutions, as well as from fixing the Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) programs.
Much of the forgiveness has gone to middle-aged borrowers who have been repaying their loans for years or decades. In fact, nearly three-quarters of the relief has gone to borrowers enrolled in PSLF and IDR plans, who should have already received forgiveness but didn’t due to administrative error or other reasons, the White House told Fortune. Borrowers in those tracks have been making repayments for at least a decade or two.
PSLF applies to borrowers in certain public servant professions, including teachers, nurses, firefighters, and government workers. Before Biden took office, it was a notoriously broken system, with few people actually receiving the forgiveness they were eligible for under the rules of the program. The administration undertook a major overhaul of PSLF and IDR forgiveness.
Most recently, Biden forgave $4.8 billion in debt for many public servants and some borrowers who have been making payments on their loans for decades.
What’s next for student loan forgiveness
Not all hope for widespread cancelation is necessarily lost. The Biden administration is embarking on a plan B for forgiveness, which would provide debt relief to borrowers whose loan balances exceed what they originally borrowed because of interest payments or have been making payments for 25 or more years, among others.
That effort, which is narrower in scope than the original widespread forgiveness plan, still has to go through much of the administrative process to be implemented.
"I vowed to improve the student loan system so that a higher education provides Americans with opportunity and prosperity—not unmanageable burdens of student loan debt," Biden said in a recent statement. "I won’t back down from using every tool at our disposal to get student loan borrowers the relief they need to reach their dreams."
More immediately, the Biden administration created a new IDR plan—called the Saving on a Valuable Education, or SAVE, plan—that reduces monthly payments for many lower-income borrowers. Experts say this new plan is likely a more transformative policy than the one-time cancelation would have been: It's an ongoing effort that significantly reduces many borrowers' monthly payments.
And Biden has made changes to income-driven repayment plans and PSLF to make it easier to actually receive loan cancellation once the requirements are met. His administration also announced the one-time Fresh Start program, which makes it possible for borrowers who defaulted on their federal student loans prior to the COVID-19 payment pause to get back in good standing.
