Understanding Biden’s Efforts to Alleviate Student Loan Debt in the US

Learn about President Biden’s initiatives to alleviate student loan debt in the US, including loan forgiveness programs and relief efforts for defaulted borrowers. Keep track of important dates related to student loans.

by: Maria Laus

Questions Answered in this Article

1. What actions has the Biden administration taken to help alleviate the burden of student loan debt on borrowers?

• The Biden administration has implemented several measures, including the extension of the zero-interest pause on loan payments, loan forgiveness programs, a new income-driven repayment plan, a relief program for defaulted borrowers, and an emergency relief fund for college students impacted by the pandemic.

2. How much relief were federal borrowers eligible for under the Biden administration’s debt cancellation plan?

• Federal borrowers were eligible for relief of up to $20,000.

3. When is the Supreme Court expected to decide on the legality of the Biden administration’s debt cancellation plan?

• The Supreme Court is expected to decide by the end of June.

4. What is the Fresh Start program, and what does it aim to achieve?

• The Fresh Start program is a relief program for borrowers who have defaulted on their student loans, aiming to remove penalties and make the rehabilitation process more affordable and accessible for borrowers who want to rehabilitate their loans and move forward with a payment plan.

5. What are the critical dates related to student loans that borrowers should keep track of?

• May 1, 2023, July 2023, June 30, 2023, July 1, 2023, August 28, 2023, and October 2023 are all critical dates related to student loans that borrowers should keep track of. These dates relate to actions related to income-driven repayment plans, Public Service Loan Forgiveness, new interest rates, and the resumption of federal student loan payments, among others.

Biden’s Efforts to Alleviate Student Loan Debt in the US

Updated Feb. 28, 2023 11:30 a.m. PT to incorporate the latest from the Supreme Court oral arguments. 

President Biden’s numerous efforts to alleviate the $1.6 trillion in federal student loan debt are being deliberated by the Supreme Court, with his overall student debt cancellation plan being his most prominent initiative yet. The Biden administration has previously expanded the federal student loan program’s capacity to forgive student debt by waiving payment-counting rules, assisting defrauded borrowers in obtaining refunds from closed colleges, and granting disabled borrowers relief. Additionally, a new income-driven repayment plan may benefit millions of borrowers by modifying how discretionary income is measured.

In August, the White House announced that federal borrowers could receive relief of up to $20,000. Nearly 26 million individuals applied for federal student debt cancellation when the Department of Education released the application in mid-October. However, the relief plan faced increasing legal challenges, resulting in oral arguments before the Supreme Court on February 28. The Supreme Court is expected to decide by the end of June. According to Betsy Mayotte, a student loan expert with over two decades of experience and the president and founder of The Institute of Student Loan Advisors, “This president has done more, especially for the most vulnerable student borrower populations, than any other administration I’ve ever seen.”

Despite the possibility of debt cancellation being approved by the Supreme Court, it may not be sufficient to address the underlying problem that prompted public pressure for forgiveness in the first place: high college costs and record inflation, which led to interest rates on student loans rising after years of being low. This is the current status.

What Biden Has Done for Borrowers so Far

The Biden administration has implemented several measures to help alleviate the burden of student loan debt on borrowers. One of the most significant actions the White House took is the extension of the zero-interest pause on loan payments initiated by President Donald Trump. This forbearance has been extended until summer 2023 to give borrowers more time to manage their finances and resolve legal challenges around debt cancellation.

In addition, the Department of Education has revised existing loan forgiveness programs, resulting in $38 billion in loans being canceled for approximately 1.75 million borrowers since the start of the Biden presidency. Furthermore, the administration has introduced a new income-driven repayment (IDR) plan that changes how payments are calculated and how much income is counted. For most borrowers who enroll, monthly payments should be significantly reduced.

The White House has also implemented a relief program for borrowers who have defaulted on their student loans. The Fresh Start program addresses the severe consequences of default, such as the potential seizure of tax refunds and Social Security checks and the long-lasting impacts on credit. The program removes penalties and makes the rehabilitation process more affordable and accessible for borrowers who want to rehabilitate their loans and move forward with a payment plan.

Finally, the administration has created an emergency relief fund to provide financial aid to college students impacted by the pandemic. More than 18 million students have received direct cash grants under the Higher Education Emergency Relief Fund since the start of 2021. In 2021 alone, institutions distributed $19.5 billion of emergency grants to current students to help them meet their basic needs and continue their education. These measures demonstrate the Biden administration’s commitment to helping borrowers manage their student loan debt and navigate the financial challenges posed by the pandemic.

Critical Dates to Keep in Mind for Student Loans

• May 1, 2023: This is the deadline for several vital actions related to income-driven repayment (IDR) plans and Public Service Loan Forgiveness (PSLF). Borrowers who want additional months counted toward IDR must act by this date, while borrowers with commercially-held FFELP loans must consolidate by May 1 to benefit. Those considering PSLF must apply by May 1 to ensure the recount will be used to their PSLF count of 120 months.
• July 2023: This is the deadline for borrowers weighing IDR forgiveness to decide whether or not to enroll so that future payments will be counted.
• June 30, 2023: The deadline for submitting the 2022-23 Free Application for Federal Student Aid (FAFSA). It’s also the end of the current student loan forbearance period if lawsuits related to debt cancellation have not been resolved before then. In that case, payments would start in 60 days.
• July 1, 2023: New interest rates will take effect for federal student loans for the 2023-24 school year.
• August 28, 2023: This is the latest possible date that federal student loan payments could resume if lawsuits related to debt cancellation remain unresolved.
• October 2023: This is the deadline for applying for debt cancellation, one year after the application window opens.
• October 1, 2023: This is the traditional opening date for the 2024-25 FAFSA. Be sure to submit it on time to be considered for financial aid for the upcoming academic year.

Summary

• The Biden administration has implemented several measures to help alleviate the burden of student loan debt on borrowers.
• The most significant action taken by the White House is the extension of the zero-interest pause on loan payments initiated by President Donald Trump until summer 2023.
• The Department of Education has canceled $38 billion in loans for approximately 1.75 million borrowers since the start of the Biden presidency.
• The administration has introduced a new income-driven repayment (IDR) plan that changes how payments are calculated and how much income is counted. Monthly payments should be significantly reduced for most borrowers who enroll.
• The White House has also implemented a relief program for borrowers who have defaulted on their student loans, called the Fresh Start program.
• The administration has created an emergency relief fund to provide financial aid to college students impacted by the pandemic.
• The Supreme Court is currently deliberating Biden’s student debt cancellation plan, which faced increasing legal challenges. The decision is expected by the end of June.
• Despite the possibility of debt cancellation being approved, it may not be sufficient to address the underlying problem of high college costs and record inflation, which led to interest rates on student loans rising after years of being low.
• The article also provides a list of critical dates related to student loans, including deadlines for income-driven repayment plans, Public Service Loan Forgiveness, submitting the FAFSA, and when new interest rates will take effect for federal student loans.