Updated Oct 6, 2023 - Politics & Policy

How Biden forgives student debt despite the Supreme Court ruling

an illustration of a vintage heather grey sweatshirt with the words "pay to the order of" on it

Illustration: Tiffany Herring/Axios

President Biden announced $9 billion in student loan relief this week, months after the Supreme Court blocked his signature debt forgiveness proposal.

The big picture: Despite the setback, Biden's administration has delivered relief for some borrowers by circumventing the need for Congressional or court approval. He's used the Department of Education's existing authority to wipe $127 billion of student debt for roughly 3.6 million people since 2021.

Driving the news: The administration is using programs like Public Service Loan Forgiveness (PSLF), which is already in law, as a way to forgive some borrowers' loans, a White House spokesperson told Axios.

  • The latest round of forgiveness is for income-driven repayment and PSLF, existing programs in statute and regulation.
  • "The Department worked to make fixes to these programs," a Department of Education spokesperson told Axios.

Zoom in: The PSLF program, which had been in place for nearly 15 years, had only helped about 7,000 borrowers "because of red tape" before Biden took office, he said earlier this week.

  • "Thanks to the reforms, more than 700,000 borrowers have had their debts forgiven," Biden said.
  • Other existing loan forgiveness programs include total and permanent disability discharge; borrower defense to repayment discharges for defrauded borrowers; closed school discharge for borrowers whose school closed abruptly; and teacher loan forgiveness.

By the numbers: The Biden administration's latest round of debt cancelation will help 125,000 borrowers.

  • Of those, 53,000 borrowers will receive relief under the PSLF program, which wipes out the student loan balance of public service workers who have worked for 10 years and made 120 qualifying payments.
  • About 51,000 borrowers will get the relief via an income-driven repayment plan. This will apply to people who have worked for 20 or more years but never received the debt forgiveness they were entitled to.
  • Roughly 22,000 borrowers who have a "total or permanent" disability will also receive the relief, the White House said.

Zoom out: Federal student loan payments resumed this month for some 40 million Americans after a more than three-year pause.

  • Repayments were halted in March 2020, when former President Trump issued the first of many pauses during the pandemic.

Worth noting: The Biden administration this summer launched an income-driven repayment plan, Saving on a Valuable Education or SAVE, that calculates payments based on income and family size.

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