The U.S. Department of Education announced last week it would wipe out $5.8 billion of student loan debt held by 323,000 borrowers who have a total and permanent disability (TPD). Eligible debt holders won’t even need to apply for the forgiveness: The Biden administration will automatically discharge the loans in September by using Social Security Administration records to identify those people who are listed as disabled.
This one chart puts Biden’s student loan cancellation into perspectiveBY Lance LambertAugust 25, 2021, 1:19 PM
This marks the third round of student debt cancellation issued by the Biden camp since moving into 1600 Pennsylvania Avenue. The previous rounds were for borrowers who attended schools like ITT Technical Institute and Corinthian Colleges that the Department of Education determined used deceptive or illegal practices.
In total, the Department of Education has approved cancelling $8.7 billion in student loan debt held by more than 450,000 borrowers.
But in the grand scheme of things, that’s only a tiny percentage of all U.S. student loan debt. Indeed, the $8.7 billion amounts to less than 1% of all student loan debt. As of the second quarter of 2021, U.S. borrowers hold more than $1.73 trillion in student loan debt.
That said, these announcements show Biden-appointed Education Secretary Miguel Cardona is willing to go further down the debt cancellation road than previous agency heads during the Obama and Trump administrations.
It’s unclear what’s coming next on the student loan forgiveness front. While Biden has publicly opposed debt forgiveness of $50,000 per borrower, he’s shown an openness to something in the $10,000 ballpark. However, the President hasn’t shown support for attempting to do it through executive order. The odds of an executive order were further diminished last month when House Speaker Nancy Pelosi told reporters Biden doesn’t have the legal authority to do so.
“People think that the President of the United States has the power for debt forgiveness—he does not,” Pelosi told reporters in July. “That would have to be an act of Congress.”
Will Pelosi act on it? It’s unclear. Through their first seven months in power, Democratic leaders in Congress have yet to announce plans to put up a student loan forgiveness bill for a vote.