US Department of Education Announces New Plans to Deliver Debt Relief to Tens of Millions of Americans

Department of Education releases new state-by-state numbers showing the effect of four major discharge program proposals for the 4 million borrowers who have already been approved for relief

WASHINGTON – The US Department of Education Administration released initial details of a new set of plans that would provide student debt relief for tens of millions of borrowers across the country. The plans would bring the total number of borrowers eligible for student debt relief to over 30 million, including the 4 million borrowers who have already been approved for debt cancellation by the Biden-Harris Administration over the past three years. The public will have an opportunity to comment on these plans in the coming weeks, according to the official website of the Department. 

The US Department of Education (Department) is also releasing combined state-by-state totals for approved discharge across four existing major student loan forgiveness programs: Public Service Loan Forgiveness (PSLF), Income-Drive Repayment (IDR), Saving On A Valuable Education (SAVE), and Total and Permanent Disability (TPD).

“These state-by-state numbers show the Biden-Harris Administration’s historic student loan efforts are already improving lives in every part of the country,” said U.S. Secretary of Education Miguel Cardona. “Thanks to our unapologetic commitment to provide relief to as many borrowers as possible as quickly as possible, our regulatory efforts would help tens of millions more borrowers find financial breathing room—and help fix our country’s broken higher education system.”

The plans announced by President Biden are the next step in a regulatory process that began last summer to provide debt relief to as many borrowers as possible as quickly as possible under the Higher Education Act. The proposals would permit the following types of waivers: 

Waiving accrued and capitalized interest for millions of borrowers

More than 25 million borrowers owe more than they originally borrowed, including many who have made years of payments, due to the interest that accrues on Federal student loans. President Biden will announce plans to cancel up to $20,000 of the amount a borrower’s balance has grown due to unpaid interest on their loans after entering repayment, regardless of their income.  

Low and middle-income borrowers enrolled in the SAVE Plan or any other income-driven repayment (IDR) plan would be eligible for waiver of the entire amount their balance has grown since entering repayment. This group of borrowers includes single borrowers who earn $120,000 or less and married borrowers who file joint tax returns who earn $240,000 or less.  

No application will be needed for borrowers to receive this relief if the plan is finalized as proposed. We estimate that of the 25 million borrowers potentially helped by such a waiver, 23 million would see the entirety of their balance growth eliminated.

Automatically discharging debt for borrowers otherwise eligible for loan forgiveness under SAVE, closed school discharge, or other forgiveness programs, but not enrolled

Too many borrowers eligible for relief—including immediate cancellation—have historically not been able to overcome paperwork requirements, bad advice, or other obstacles. While the Department has worked to make it easier to apply for relief, the proposed plans would automatically cancel debt for borrowers otherwise eligible for relief through the SAVE plan, closed school loan discharges, PSLF, or other forgiveness opportunities but who have not successfully applied for that assistance. For instance, borrowers who are eligible for the shortened period until forgiveness under SAVE could receive help automatically. This applies to borrowers who originally took out $12,000 or less in loans and have been in repayment for 10 years that would be eligible to get their remaining debt waived.

For every additional $1,000 in loans they took out (up to $21,000 total for undergraduate loans and $26,000 total for graduate loans), a borrower would be eligible for relief after an additional year of repayment. For example, if a borrower took out $13,000 in loans, they would be eligible for debt cancelation after 11 years in repayment. 

Eliminating student debt for borrowers in repayment for 20 years or more

More than 2 million borrowers have been repaying had their student loans for two decades or longer and still carry debt from these old loans. The Administration’s new proposals would waive student debt for borrowers with only undergraduate debt would qualify for forgiveness if they first entered repayment at least 20 years ago (on or before July 1, 2005), and borrowers with any graduate school debt would qualify if they first entered repayment 25 or more years ago (on or before July 1, 2000). Both Direct Loans and Direct Consolidation Loans that repay only undergraduate study or graduate study for 20 or 25 years respectively are eligible for relief in this proposal.

Borrowers would not need to be on an income-driven repayment plan to qualify.

Helping borrowers who enrolled in low-financial-value programs or institutions 

The Administration has worked aggressively to hold colleges accountable when they leave students with mountains of debt and without good job prospects. The Administration is proposing to waive loans from borrowers who took on debt to enroll in institutions or programs that lost their eligibility to participate in the Federal student aid program or were denied recertification because they cheated or took advantage of students. Further, borrowers who attended institutions or programs that closed and failed to provide sufficient value—for example, those that leave graduates with unaffordable loan payments or earnings no better than what someone with a high school diploma earns—would be eligible for relief under this proposal. 

Assisting borrowers who experience hardship in paying back their loans
While these proposed plans and executive actions to date would help tens of millions of borrowers, there are many other borrowers whose student loans continue to be a barrier for them participating in the economy, accessing economic mobility, or pursuing their dreams. The Administration will also pursue a specific action that is dedicated to canceling student debt for borrowers experiencing hardship in their daily lives that prevent them from fully paying back their loans now or in the future. This could include delivering automatic forgiveness to borrowers predicted to be likely to default on their loans, or through an individualized applications where borrowers could detail their financial hardship that is preventing them from being able to fully pay back their loan, such as a child care or medical expense.

"These historic steps reflect President Biden’s determination that we cannot allow student debt to leave students worse off than before they went to college,” said U.S. Under Secretary of Education James Kvaal. “The President directed us to complete these programs as quickly as possible, and we are going to do just that.”

New State-by-State Data on Forgiveness Efforts
The Department’s new set of State-by-State numbers shows the statewide impact of 85 percent of the $146 billion in approved relief for 4 million borrowers under this Administration.

Today’s numbers highlight the State-level effect of four major programs reformed and improved by the Biden-Harris Administration: 

Income-Driven Repayment Forgiveness: Nearly $46 billion in relief to more than 930,000 borrowers. Prior to the Biden-Harris Administration, only 50 borrowers had received forgiveness through these programs. The Administration addressed longstanding challenges with inaccurately tracking progress toward forgiveness and misuse of forbearances to ensure borrowers got the credit they deserve.

Public Service Loan Forgiveness: $62.5 billion for nearly 872,000 borrowers. The Biden-Harris Administration restored the broken promise of PSLF. Just 7,000 borrowers had been approved for forgiveness prior to President Biden taking office.

SAVE Early Forgiveness: $1.2 billion in loans for nearly 153,000 borrowers who are eligible for the shortened time to forgiveness benefit under President Biden’s SAVE Plan. 

Total and Permanent Disability Discharge: $14.1 billion for 548,300 borrowers. In August 2021 the Biden-Harris Administration issued a final rule automatically discharging the loans of borrowers identified as eligible for a total and permanent disability discharge based upon a data match with the Social Security Administration. The Administration also rewrote rules to simplify the process of becoming eligible for a disability discharge that went into effect on July 1 of last year.

An unparalleled track record of borrower assistance

The Biden-Harris Administration has taken historic steps to reduce the burden of student debt and ensure that student loans are not a barrier to opportunity for students and families. The Administration secured the largest increase to Pell Grants in a decade and finalized new rules to protect borrowers from career programs that leave graduates with unaffordable debts or insufficient earnings. Beyond the state-by-state relief, the Administration has also approved $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.