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Biden Moves to Cancel Student Debt for 323,000 More Borrowers

Is he ramping up to widespread student debt forgiveness? Here's what we know.


The Biden administration announced on Thursday that it would automatically cancel the student debt of 323,000 borrowers with disabilities.

It’s a fantastic thing to do. It’s also part of a strategy that’s more limited than wholesale cancellation of student debt and more limited than what President Biden promised during the campaign, what other leading Democrats are calling for, and what advocates and the data say is needed to solve the student debt crisis.

Here’s what you need to know about Biden’s latest move, how it fits into his long-term strategy, and what will hopefully happen next.

Whose student loan debt did the Biden administration just cancel?

The administration just committed to automatically canceling the debt of borrowers eligible for the Total and Permanent Disability Discharge Program, which is founded on the idea that it’s unfair to ask borrowers to pay back their student loans if a physical or psychological impairment prevents them from maintaining substantial, gainful employment.

In the past, borrowers had to submit formal applications for the TPD program, something that many of them were unable to do because of their disabilities or their ignorance of this program’s existence.

After years of disability advocates calling for this change, the Department of Education finally heeded their calls. It will automatically zero out $5.8 billion of federal student loan debt held by 323,000 borrowers who have been identified by the Social Security Administration (which administers their disability checks) as eligible for TPD.

The automatic discharges will begin in September.

What has Biden previously done for borrowers?

They follow an earlier effort in April that canceled the debt of borrowers in a specific discontinued federal lending program.

Another, in July, canceled $500 million in debt for borrowers who had been misled, defrauded, or otherwise harmed by predatory, often for-profit, colleges and universities. That was a reversal of the policies instituted by Betsy DeVos during the Trump administration, which increased the burden of proof applicants for forgiveness needed and instituted a system of partial instead of complete forgiveness.

What are the prospects for future student debt cancellation?

Canceling student debt remains a very popular policy. Leading Democrats like Senators Elizabeth Warren and Chuck Schumer have called on the president to forgive $50,000 in student debt for all borrowers. Those calls follow Biden’s own campaign promise to cancel $10,000 in student debt for all borrowers.

But President Biden hasn’t implemented any across-the-board relief, instead, he’s focused on how to make programs that affect a limited number of borrowers more generous and effective as debt forgiveness instruments.

As for the kind of widespread forgiveness that so many Americans are desperate for, he punted on the issue by asking his education secretary to look into the matter and issue a memo on his legal authority to do so. That memo is still in progress.

That is…unfortunate. Biden’s campaign promise to cancel substantial amounts of student debt, calls from other leaders in his party, and his own actions nibbling around the edges of student loan forgiveness show that he has a lot of executive authority in the area, a contention supported by a reasonable reading of the Higher Education Act, which gives the Education Secretary the authority to “enforce, pay, compromise, waive, or release” government-held federal student loans.

And though there is some legal debate on the question, the fact that both Biden and Trump used this authority to pause repayment of federal student loans suggests that widespread cancellation stands a good chance of surviving a court challenge. It would also do wonders for the lives of borrowers, narrow the racial wealth gap by 25 percent, and improve the economy by removing a $1.7 trillion burden and allowing money that would’ve gone to repayment to go to buying homes, traveling, investing, and other activities that benefit the economy at large.

The longer Biden waits to implement a popular, effective, and legally sound policy the more Americans struggling with student debt will suffer. Here’s hoping he acts soon, improving the lives of millions of American families with the stroke of a pen.