Biden’s student loan forgiveness climbs to $16 billion—here’s who gets it

BY Sydney LakeMarch 15, 2022, 1:08 PM
U.S. President Joe Biden speaks during the National League Of Cities Congressional City Conference meeting in Washington, D.C., as seen in March 2022. (Photographer: Oliver Contreras—Sipa/Bloomberg/Getty Images)

A little more than a year in office, President Joe Biden has canceled approximately $16 billion in federal student loan debt. While he campaigned on canceling up to $10,000 in debt per borrower, the rounds of cancellations he’s announced so far have been for targeted groups, including borrowers with disabilities, those students who were defrauded by their institutions, and people who work in public service. 

Forgiveness announced by Biden in 2021 and early 2022 accounts for just about 1% of federal student loan debt. Student Debt Crisis Center, a movement to cancel student loan debt, reports that debt today stands at $1.7 trillion held among 45 million borrowers.

“The cost of education, and the enormous debt looming over American families, remains one of the most challenging economic issues of our time,” SDCC president Natalia Abrams wrote in a statement in early March. “With economic uncertainty growing every day, the president has the unique ability to free families from financial distress immediately by canceling student debt by executive action and we call on him to do so immediately.”

While there’s still plenty more to be done on the front of canceling federal student loan debt, Biden and the Department of Education have announced several rounds of forgiveness in the past year. Fortune has rounded up all of the groups that have received aid so far. 

Defrauded borrowers

The Education Department first announced in March 2021 that it would streamline the process to receive debt relief through borrower defense claims, which are designed for those people who attended institutions that “engaged in certain misconduct.” This means that the school had engaged in deceptive or illegal practices.

The first round of forgiveness in this category helped about 72,000 borrowers who attended Corinthian Colleges, ITT Technical Institute, and American Career Institute. The first round totaled about $1 billion in relief. 

Further rounds of forgiveness for defrauded borrowers came in July and August 2021. In July, 1,800 more borrowers who attended Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute learned they would have their loans discharged—totaling $55.6 million in relief. 

The August round of forgiveness, which totaled $1.1 billion, expanded the first round of cancellations and went to borrowers who attended ITT Tech but never graduated. The Education Department reported that about 43% of these borrowers were in default. An additional 115,000 borrowers benefited from this round.

“Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution’s misconduct,” Education Secretary Miguel Cardona said in a March 18, 2021, statement announcing the first round of forgiveness. Automatic student loan discharges for these borrowers started in September 2021.

This February, Biden announced a $415 million round of student loan forgiveness for about 16,000 defrauded borrowers who had attended DeVry University, Westwood College, Corinthian Colleges, Marinello Schools of Beauty, the nursing program at ITT Technical Institute, and the criminal justice programs at Minnesota School of Business/Globe University. 

About 20% of that round of forgiveness went to borrowers who had attended DeVry, which the Education Department found had “repeatedly misled prospective students across the country” from 2008 to 2015 by advertising an inflated job placement rate.

Disabled borrowers

In August 2021, the Education Department also announced a whopping $5.8 billion round of student debt cancellation for 323,000 borrowers with “total and permanent” disabilities. This was the largest round of student loan forgiveness by dollar amount during Biden’s tenure.

Borrowers with a total and permanent disability have to be identified by the Social Security Administration through a data match. The SSA evaluates whether a borrower can still work; many disabled veterans qualify for this type of debt relief. 

The Education Department started discharging these loans in September 2021. As of Jan. 20, over $7 billion for more than 400,000 borrowers with a TPD has been discharged, according to the Education Department.

Public service workers

The Education Department in early October 2021 announced changes to its largely failed Public Service Loan Forgiveness (PSLF) program, which was created to provide debt relief for public servants. Changes immediately canceled $1.7 billion in federal student loan debt for 22,000 borrowers, and as of Jan. 20, the Education Department reports that nearly $5 billion in PSLF loans have been canceled for a collective 70,000 borrowers.

PSLF was established in 2007 by Congress to forgive the remaining balance on direct loans for public service workers after they had made 10 years’ worth of payments, or 120 qualifying monthly student loan payments. Before the overhaul of the program, however, 98% of borrowers who had applied for forgiveness were denied by the program because of several hurdles with the approval process.

Now PSLF borrowers will be able to retroactively count payments that had been made under a loan program that didn’t qualify.

“The changes are real and significant,” Federal Student Aid chief operating officer Richard Cordray wrote in a Nov. 8, 2021, letter to PSLF borrowers. “Our new approach will add months or years of service credit for huge numbers of student loan borrowers by counting certain payments that had been ineligible. In some cases, borrowers will earn full loan forgiveness based on the changes.”

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