In his final days in office, President Joe Biden announced relief for over 150,000 federal student loan borrowers. This latest decision cancels about $1.26 billion for 85,000 people who attended schools accused of deceptive practices. Additionally, $2.5 billion goes to 61,000 borrowers with total and permanent disabilities, while $465 million is set aside for 6,100 public service workers.
With this new round of cancellations, the total student loan debt forgiven since Biden took office has reached an impressive $183.6 billion, helping more than 5 million Americans, according to the White House. Biden proudly stated, “We have forgiven more student loan debt than any other administration in history.”
This relief often comes through a program called borrower defense. This program lets students request debt discharge if their colleges engage in misleading advertising or other fraudulent actions. However, this situation is currently under legal review. The U.S. Supreme Court is considering a case regarding the Biden administration’s borrower defense rules, which aimed to make applying for debt cancellation easier and allow for automatic discharges in certain instances.
The borrower defense provision has been around since 1995 but became more relevant after the downfall of Corinthian Colleges in 2015. This closure led to many former students reporting significant debt without receiving a quality education. In response, the Education Department created a formal process for loan discharges in 2016. Yet, the rules were tightened under Secretary Betsy DeVos in 2019, reducing the aid borrowers could access. This change received support from then-President Donald Trump.
In 2022, the Biden administration aimed to reform these rules, providing full relief to those who had only received partial forgiveness previously. Unfortunately, this initiative has been paused since summer 2023 after a ruling from the U.S. Court of Appeals for the Fifth Circuit questioned the policy’s legality and clarity.
The court criticized the ambiguity in how Biden’s administration defined rules for holding schools accountable and pointed out that the policy might impose unfair penalties on educational institutions.
The Supreme Court has yet to announce a date for oral arguments on this matter. This ongoing legal battle highlights the complexities surrounding student loan forgiveness and the significant impact of education policies on thousands of borrowers.
