Taking a piecemeal approach, the Biden administration has expanded existing loan forgiveness programs for borrowers who work in the public sector, those who were defrauded by for-profit colleges and borrowers who are now permanently disabled.
Those moves have delivered significant relief to more than 700,000 borrowers, totaling more than $17 billion.
Yet some voters feel misled by the President, who had supported canceling $10,000 for each of the 43 million federal student loan borrowers while on the campaign trail.
“He’s not delivering on his promise,” said Jennifer Lewis, a 57-year-old nurse practitioner in Washington state who has about $80,000 in student loan debt.
“If he were to run again, I would think twice about voting for president at all,” added Lewis, a self-described “super progressive.”
“I think it’s important to keep in mind that there is far from a consensus viewpoint among Democratic members of Congress and Democratic voters that large sums of debt should be canceled,” said Michelle Dimino, an education senior policy adviser at Third Way, a think tank that promotes center-left ideas.
Pandemic, inflation set back some borrowers
Sandeep and Tom Berry were hoping Biden would cancel some of their student debt but have lost hope of that pledge coming to fruition.
The North Carolina couple, who both identify as moderates, have $160,000 in student loan debt borrowed to pay for Tom’s MBA.
“We knew what we signed up for. Tom and I made a decision to take on these loans,” said Sandeep, 39.
But the pandemic threw a wrench into their financial plans. Sandeep, a consultant, planned to return to work once both of their children were in school. But she put those plans on hold when schools shut down and both kids were home for remote learning. She now hopes to reenter the workforce next year.
“I’m not one to ask the government to give away money, but given Covid — a once-in-a-lifetime situation — I feel like forgiving student loans as a one-time thing would really help,” she said.
When payments resume, the Berry family will be on the hook for $1,000 a month — a payment the couple says will be hard to make since inflation has made their everyday expenses higher.
“To be honest, the loans have been paused for so long I don’t know what we’re going to do when they are put back into effect,” said Tom, 43, noting that he thinks an unprecedented response is needed to meet the current situation, but realizes canceling debt won’t be a lasting solution.
“If he (Biden) waved a magic wand and all my debt went away, my life would get exponentially better. But I know it doesn’t solve the larger problem,” he added.
How a fringe issue became mainstream
Those proposals called for immediately canceling a minimum of $10,000 of student debt per person as a response to the pandemic, as well as forgiving all undergraduate tuition-related federal student debt from two- and four-year public colleges and universities for those borrowers earning up to $125,000 a year.
Since taking office, Biden has resisted pressure to cancel debt on his own with an executive order. It’s not totally clear that he has the authority to do so. Last year, Biden directed lawyers at the Department of Education and the Department of Justice to evaluate whether he does, in fact, have the power to broadly cancel federal student loans — but the administration has not disclosed those findings.
“I get it, I talk to people who have student debt and it’s real for them,” current Education Secretary Miguel Cardona told CNN earlier this year.
“But the President takes this seriously,” he said, noting that the administration is working to fix the system to help future students, too, as they weigh borrowing to pay for school. The department has started rewriting a federal rule, known as gainful employment, that aims to prevent students from taking on too much debt to attend predatory for-profit colleges. The rule was revoked by the previous administration.
Targeted debt relief for 700,000-plus people
More than 700,000 people have seen their student debt wiped away under Biden, some of whom had been waiting months, if not years, for the Department of Education to process their forgiveness claims under existing relief programs.
The department has been chipping away at a backlog of forgiveness claims filed under a policy known as borrower defense to repayment that allows former students who were defrauded by their colleges to seek federal debt relief. Under that policy, the Biden administration has canceled about $2 billion in debt held by more than 107,000 individuals who attended for-profit colleges like ITT Technical Institute and DeVry University.
The department also improved efforts to reach borrowers eligible for debt relief because of permanent disabilities.
The Biden administration’s efforts have yet to deliver debt relief for Lionel Siongco. He filed a borrower defense claim last year, arguing he was misled by the Art Institute of California in Hollywood, a campus that was part of a for-profit chain that abruptly shuttered in 2019 after losing its accreditation. In his claim, which is pending, he’s arguing the school inflated graduation rates and job placement numbers.
Siongco, now 30 and living in California, earned an associate degree in fashion design from the school about eight years before it closed. He later earned a bachelor’s degree from the Fashion Institute of Technology, a public college in Manhattan, but he said the institution did not accept any of his previous credits.
He hopes the Department of Education will cancel the loans he borrowed to attend the Art Institute and said he is “so disappointed” that Biden hasn’t broadly canceled student debt.
“If we can bail out banks and corporations in this country, why can’t we invest in the future and the education of its citizens?” he asked.
Siongco, a progressive who has more than $20,000 in student debt remaining, said that he’ll be voting for a Democrat for president. But he’s concerned that broad student loan forgiveness won’t remain a point of discussion for lawmakers.
Payment pause delivered more relief, without a political boost
In addition to Biden’s actions to expand existing forgiveness programs, he has also extended the pandemic-related pause on federal student loan payments and interest three times. Congress initially provided an automatic pause on payments and interest for most federal student loans in March 2020, which was then extended by the Trump administration.
The analysis may underestimate the relief because it doesn’t take into account the added benefit that those pursuing Public Service Loan Forgiveness receive from the payment pause. They are still receiving credit toward the 10 years of required payments as if they had continued to make them during the pandemic, as long as they are still working full time for qualifying employers.
Federal borrowers who didn’t make any payments during the pandemic will owe the same amount when payments resume as they did in March 2020. But they will have saved money thanks to the interest accumulation pause. Those savings are in addition to the $17 billion canceled by the Biden administration for defrauded borrowers, public sector workers and those permanently disabled.
“I don’t think, unfortunately, that’s going to give Democrats the political win they are looking for,” said Marcela Mulholland, political director at Data for Progress, a think tank and polling firm that supports progressive causes.
“I think canceling student debt or extending the pause are examples of things Democrats should be doing ahead of the midterms. There are very obvious adverse political consequences to restarting payments in an election year,” she added.
Administration officials have recently said they are considering another extension before payments are set to resume on May 1.
The pause costs the government roughly $4 billion a month, according to the Committee for a Responsible Federal Budget.
Canceling existing student debt would also do little to help future college students, borrowers who have already paid off their loans and those who never went to college in the first place.
Joseph Steinfels, a public defender in Illinois, sees student loan debt cancellation as something that would increase the economic disparity in the US.
“I can’t get past the fact that this would not help my clients, the ones truly suffering, or the millions of others who never set foot in college,” said Steinfels, a former Marine.
“It’s taking taxpayer dollars and creating unjust enrichment,” he said.
Steinfels, now 45, fully paid off the loans he borrowed for his undergraduate degree. He used a combination of military benefits and his own funds to pay for his three graduate degrees and a certificate.
“I personally had a unique path, and I’m just so grateful,” he said.
Steinfels, who has four children, considers himself an independent and said student loan policy wouldn’t be a “make-or-break” issue for him next time he goes to the polls.