Student loan forgiveness is heating up. Here’s what to expect next

BY Lance LambertOctober 20, 2021, 6:04 PM
UC Riverside students walk past the UCR letters in the quad, as seen in September 2021. (Photo by Terry Pierson—The Press-Enterprise/Getty Images)

Earlier this month, the U.S. Department of Education announced it will expand the Public Service Loan Forgiveness (PSLF) program to cover more affected borrowers. The changes not only help future borrowers get their loans forgiven but will also be retroactively applied to public servants who saw their PSLF claims denied in the past. The latter means about 22,000 borrowers holding $1.74 billion in student debt will see their loans canceled.

This move marked the fifth round of student loan forgiveness issued by the Department of Education since President Joe Biden appointed Education Secretary Miguel Cardona. Three of those rounds were for defrauded students, while one round went to disabled borrowers. The PSLF overhaul also makes it clear the Biden administration is more aggressive on the student loan front than past administrations were. Simply put: Student loan forgiveness is heating up.

That said, relative to all outstanding student debt, these rounds of forgiveness are pretty small: The $11.24 billion in soon-to-be canceled debt issued through these five rounds amounts to less than 1% of the total $1.7 trillion U.S. student loan debt.

But more forgiveness could be on the way.

At the request of Biden, the Department of Education is actively looking to see if the president has the legal authority to wipe out up to $50,000 per student loan borrower. That report, which was supposed to be released back in the spring, has yet to surface.

However, even if Biden’s team tells him he has the power to wipe out this debt, it doesn’t mean he will do so: He’s publicly supported doing only $10,000 in forgiveness and has straight out said no to wiping out $50,000 per borrower. Not to mention, if Biden did issue mass student loan forgiveness through an executive order, it will likely face immediate legal challenges—something even his political ally House Speaker Nancy Pelosi doesn’t think he’d win.

So what forgiveness options would that leave Biden with?

Biden’s preference during the campaign was for student loan forgiveness to come through an act of Congress. But his party’s slim majority in the U.S. Senate makes passing it, well, challenging. Look no further than “free community college” measures getting thrown out of the reconciliation bill on Tuesday in an effort to appease the likes of moderate Sen. Joe Manchin. If more forgiveness doesn’t come through an executive order or Congress, that means the only remaining route is more announcements by the Department of Education. However, the agency’s power is limited to expanding or tweaking existing forms of borrower protections—hardly the mass forgiveness progressives are seeking.

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