Who’s next in line for student loan forgiveness? Experts weigh in

BY Sydney LakeOctober 01, 2021, 1:49 PM
A graduate wears the cost of tuition on his cap during the Boston University Commencement, as seen in May 2017. (Photo by Jessica Rinaldi—The Boston Globe/Getty Images)

Since taking office in January, President Joe Biden has forgiven $9.5 billion in student loans via four rounds of cancellations targeting two main groups of borrowers: Americans with total and permanent disabilities and people who attended now-defunct institutions. The amount of forgiveness makes up less than 1% of all federal student loan debt, though, which totals $1.7 trillion among 43 million borrowers.

These rounds of forgiveness have prompted borrowers to wonder whether more rounds of forgiveness are on the way. Some student loan experts think so. 

“I think it is highly likely that the Biden administration will continue to take action concerning targeted loan forgiveness,” Mark Kantrowitz, author of How to Appeal for More College Financial Aid, tells Fortune. 

Targeted forgiveness is vastly different from mass cancellation, though. Democratic lawmakers and student loan forgiveness advocates have pushed for up to $50,000 in cancellation per borrower, but Biden has said he’s only “prepared to” cancel $10,000. That’s partly because of a looming question of Biden’s authority to make mass cancellations on student debt through an executive order, which he and Speaker of the House Nancy Pelosi don’t believe he has. Rather, they argue an act of Congress is necessary.

“It’s hard to say, but at this point it does seem more likely that we’ll continue to see targeted student loan forgiveness for certain groups of borrowers,” Rebecca Safier, a certified student loan counselor with Student Loan Hero, tells Fortune. “It seems that Biden hasn’t wanted to commit to any mass student loan forgiveness.”

So who can expect upcoming targeted student loan forgiveness?

More borrowers with defense loan discharge claims

Thus far, three of the four rounds of student loan forgiveness announced this year have gone to borrowers who attended institutions that took part in deceptive or illegal practices. Students who fall into this category must submit a borrower defense loan discharge claim through the Federal Student Aid office.

Kantrowitz says the Biden administration is likely to continue to make borrower defense to repayment forgiveness rounds. Essentially, we could see more borrowers who attended now-defunct institutions have their loans forgiven. 

Under rounds one, two, and four of student loan forgiveness granted this year, the Education Department will grant full loan forgiveness to borrowers who attended Corinthian Colleges, ITT Technical Institute, American Career Institute, Court Reporting Institute, Westwood College, or Marinello Schools of Beauty. All of these schools have been determined to have misled students. About 188,000 borrowers will benefit from these three forgiveness rounds. 

“Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution’s misconduct,” Secretary of Education Miguel Cardona said in a March 18 statement announcing the first round of forgiveness.

Public service workers

Another group of borrowers that might have forgiveness on the way is public service workers. These borrowers deserve to be at the top of the priority list for forgiveness, Cody Hounanian, executive director of the Student Debt Crisis Center, previously told Fortune, since they’re guaranteed student loan relief under the Federal Student Aid’s Public Service Loan Forgiveness (PSLF). 

The program forgives the remaining balance on direct loans after making 120 qualifying monthly payments for workers including teachers, firefighters, and social workers. But about 90% of people who have applied for this program have been denied, according to Hounanian.

Kantrowitz and Safier agree that reform to the PSLF could be on the way. Reform might have to be implemented, however, through regulatory changes, Kantrowitz says. Regulatory change to PSLF would be a “slow process,” he says, which would involve Education Department committee meetings and a public comment period.

“I don’t think anyone knows yet what’s going to happen, but it seems that some sort of student loan forgiveness reform has been a priority,” Safier says. “Hopefully we’ll continue to see some reforms going forward.

“We’ll have to wait and see.”

See how the schools you’re considering landed in Fortune’s rankings of the best executive, full-time, and online MBA programs.