KEY TAKEAWAYS
- Before being elected, President Joe Biden promised broad student loan forgiveness and more generous repayment plans. However, he only accomplished some of his proposals.
- The Supreme Court blocked Biden’s initial student loan forgiveness plan, and legal challenges are still preventing his more generous income-driven repayment plan from being implemented.
- Under various other initiatives, Biden forgave $188.8 billion to 5.3 million borrowers during his term.
- The incoming administration has been critical of Biden’s forgiveness and repayment plans, and after it enters the White House, some Biden-era rules may come to an end.
President Joe Biden is leaving the White House without fulfilling many of his promises to federal student loan borrowers—but it wasn’t for lack of trying.
Before he was elected, Biden promised borrowers cheaper student loan payments and easier forgiveness. Throughout his four years in office, he directed the Department of Education to implement plans that closely followed his campaign promises, but many of them were blocked or paused by legal challenges.
Despite the challenges, Biden succeeded in forgiving or discharging the student loan debt of 5.3 million borrowers, totaling $188.8 billion.
What Did Biden Promise?
During his 2020 campaign, Biden laid out his plan for student loan borrowers.
He said those making $25,000 or less would not owe payments on their federal student loans, which wouldn’t accrue interest. He said all other borrowers would only have to pay 5% of their discretionary income to their loans, and all borrowers would have their loans forgiven after 20 years.
He also promised to change the tax code so that borrowers who received income-based repayment plan forgiveness would not have to pay taxes on the forgiveness.
Additionally, Biden said he would simplify the Public Service Loan Forgiveness (PSLF) program. The updated program would offer $10,000 in forgiveness for every year a borrower spent as a public worker for up to five years.
Biden Came Through On Some Of His Promises—Others Were Blocked In Court
Biden’s initial student debt relief plan proposal would have forgiven up to $10,000 to $20,000 in student loan debt for lower to middle-income borrowers. It would have also created a new income-driven repayment plan to cut payments to 5% of a borrower’s discretionary income.
The Supreme Court blocked this proposal in June 2023, and the Biden administration began work on achieving some of those ends through other rulemaking processes.
Biden went on to introduce the Saving for a Valuable Education (SAVE) plan in October 2023, which reduced monthly payments to 10% of discretionary income and provided forgiveness after 20 years.
Last July, a provision in the SAVE Plan was scheduled to reduce payments to only 5% of borrowers’ discretionary income. However, those provisions were blocked in court before they could be implemented after much back and forth. All SAVE plan borrowers were placed in forbearance at the end of that month until the lawsuits could be resolved. Biden was able to get in almost $5.5 billion in forgiveness through the repayment plan before it was shut down.
One promise Biden fulfilled was adjusting the tax code for forgiveness. Under the American Rescue Plan Act, borrowers with loans forgiven between Dec. 31, 2020, and Jan. 1, 2026 do not have to pay federal taxes on that forgiveness.
The Biden administration also eased the eligibility rules for the PSLF program, allowing more service workers to obtain forgiveness for their loans. Before Biden entered the White House, only 7,000 borrowers had received forgiveness through the program. By the time he leaves, almost 1.1 million PSLF borrowers will have received $78.46 billion in forgiveness, the Department of Education said.
The administration also granted more than $34 billion in forgiveness to more than 1.9 million borrowers who attended schools that participated in misconduct and $18.7 billion to nearly 633,000 borrowers with total and permanent disabilities.
What’s Next For Borrowers?
As Biden leaves and a new administration enters, with many incoming officials critical of SAVE and other student loan forgiveness plans, borrowers are worried about the future of income-driven repayment and forgiveness plans.
The SAVE plan is still limited by ongoing lawsuits and now awaits action from the 8th Circuit Court of Appeals. If the appeals court rules the program is illegal or the incoming administration chooses not to defend the plan, that could be the end of the SAVE Plan.
In addition, a top Republican lawmaker told Forbes in December that student loan forgiveness and repayment plan reform could come in early 2025 and block more than just the SAVE plan.
The Department of Education and legal experts following the court cases have said borrowers who already had their loans forgiven cannot have that taken away by courts or the new administration.