Nearly $137 billion for 3.7 million borrowers
By Charlene Crowell | Center for Responsible Lending
Teachers, social workers, and other public servants are among those expected to benefit from recent Biden Administration efforts to expand eligibility for federal student loan forgiveness.
Collectively, these borrowers will be relieved of $4.9 billion debt in return for their service to communities that earned them forgiveness under Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment (IDR).
“The Biden-Harris Administration has worked relentlessly to fix our country’s broken student loan system and address the needless hurdles and administrative inaccuracies that, in the past, kept borrowers from getting the student debt forgiveness they deserved,” said U.S. Secretary of Education Miguel Cardona.
James Kvaal, U.S. Under Secretary of Education added, “The Biden-Harris Administration is not going to stop until we’ve helped all of those harmed by the broken student loan system.”
Announced by the federal Department of Education in January, this latest expansion boosts the Biden Administration’ s total student loan forgiveness to $136.6 billion for more than 3.7 million borrowers. Here’s how this unprecedented loan relief was accomplished:
$56.7 billion for 793,400 borrowers enrolled in PSLF since October 2021. Prior to the Biden-Harris Administration’s fixes to PSLF, only about 7,000 borrowers had ever received forgiveness;
$45.7 billion in IDR relief for 930,500 borrowers;
$11.7 billion for almost 513,000 borrowers with a total and permanent disability; and
$22.5 billion for more than 1.3 million borrowers who were cheated by their schools, saw their institutions precipitously close, or are covered by related court settlements.
In late 2023, the Federal Reserve determined that although most consumers pay $400 or less in monthly loan payments, 19 percent of borrowers pay far more. As reported by Motley Fool, payments between $500 and $999 are made by 14% of borrowers, while payments of $1,000 or more are paid by 5% of borrowers.
“Outstanding student loan debt exceeds outstanding auto loan debt and credit card debt,” recently noted Rohit Chopra, Director of the Consumer Financial Protection Bureau (CFPB). “If student loan borrowers are unable to successfully enroll in payment plans or obtain accurate information about their accounts, this can have a domino effect on the rest of their financial lives.”
In December 2023, CFPB issued a new report entitled “Making Ends Meet in 2023.” Two findings in this report highlight the heavy and disproportionate financial effects for borrowers of color:
“Consumers who currently have student debt were 10 percentage points more likely to have difficulty paying bills than consumers who had student debt at some point in the last 10 years.
Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.
