President Biden Is Forgiving Billions in Student Debt, No Matter How the Supreme Court Rules

The U.S. Supreme Court will decide the fate of President Joe Biden’s student loan forgiveness program any day now.

And experts widely predict the justices will rule against it, striking down the $400 billion plan to reduce or entirely wipe out college debt for some 40 million Americans.

Sixty days later, Americans are going to have to start repaying their student loans monthly for the first time since March 2020.

But while even Biden has expressed skepticism his plan can survive the legal challenge — saying after oral arguments in March, “I’m confident we’re on the right side of the law, but I’m not confident about the outcome of the decision yet” — his administration has pursued other avenues to relieve the college-loan debt load.

The U.S. Department of Education has already enacted new rules and procedures that will forgive billions in student loan debt by beefing up existing programs.

"The president has broad legal authority — multiple legal authorities — to help address student debt through debt cancellation," said Cody Hounanian, executive director of the Student Debt Crisis Center, which advocates for broad-based debt cancellation.

"The movement to cancel student debt will continue regardless of what happens at the Supreme Court."

Under the forgiveness plan that's currently before the Supreme Court, borrowers are eligible if they make less than $125,000 per year. Most people would receive up to $10,000 in loan forgiveness, though those who attended college on Pell Grants, which are meant for low-income families, are eligible for up to $20,000 in forgiveness. 

Republicans and others have criticized the forgiveness plan as unfair and said the price tag is simply too high. Critics also say forgiving student loans will benefit many wealthier Americans who do not need the taxpayer-funded assist.

Here’s what you need to know about other ways student loans are already being forgiven — and whether you are eligible.

Income-Driven Repayment to 'Repair the Harm'

Before student loan payments were paused during the pandemic, millions of Americans were struggling to make their monthly payments and chose to put their loans in forbearance, meaning their payments were paused but their loans were still accruing interest. 

What many lenders weren’t telling these borrowers is that they could actually enroll in income-driven repayment (IDR) plans, which are often eligible for forgiveness after 20 to 25 years of consistent payments.

In the decade preceding the pandemic, NPR found that almost 12 million Americans spent at least a year in forbearance when they were eligible for income-driven repayment, and a whopping 5.5 million spent more than three years in forbearance.

Lenders largely avoided steering borrowers to these programs because they were more difficult and time-consuming to arrange. 

The Department of Education announced last spring that to “address historic inaccuracies in the count of payments that qualify toward forgiveness,” it was conducting a one-time adjustment to people's accounts.

The changes gave borrowers credit toward an income-based repayment — with some restrictions — even if they made late or partial payments, put their loans in forbearance, or were using a once-ineligible payment process.

“For years, borrowers had been pushed into programs that did not help them afford their loans any more than another program would — and did not allow them to make progress towards student loan forgiveness that's already part of the system,” said Hounanian.

“It set back millions of people from getting relief."

Hounanian said the adjustments to forbearance policies and the work to get more people on income-driven repayment are “not a handout,” but are “repairing the harm” of the system.

The DOE did not return a request for comment on how many lenders would be helped by the adjustments and what the changes would cost the government.

$42B Wiped Out Through 'Public Service'

Even as the Biden administration awaits the Supreme Court's decision, it has already forgiven $42 billion of debt for more than 615,000 borrowers by expanding eligibility for the Public Service Loan Forgiveness program.

This program was created in 2007 to forgive student loan debts for people who work in many government and nonprofit jobs and make a mandated 120 monthly payments (basically, 10 years worth of repayments).

But approval was notoriously difficult, and under the Trump administration, a mere 7,000 people qualified, according to the DOE.

In 2021, the DOE created a one-time waiver that expanded eligibility, including for those with loans through the Family Federal Education Loan Program, and simplified the process to apply. Since then, hundreds of thousands of people have managed to get relief.  

U.S. Secretary of Education Miguel Cardona said last week that "the difference that Public Service Loan Forgiveness is making in the lives of hundreds of thousands of Americans reminds us why we must continue doing everything we can to fight for borrowers."

The ability to apply for the waiver expired in October 2022, but the Biden administration announced permanent changes to the program that will simplify it going forward, including moving the process entirely online.

The changes include: allowing borrowers to get credit on late payments or payments made in installments; counting deferment or forbearance periods toward the 120 payments credit if the borrower is serving in the military, undergoing cancer treatment, or facing economic hardship; and making it possible for borrowers to consolidate their debt without losing all progress toward forgiveness.

But all the rules, deadlines and rapidly shifting policies are weighing on borrowers.

“With all of these changes, and different timelines and different names, there has been an unprecedented level of confusion,” Hounanian said.

“And so borrowers today are really struggling to know where they should be investing their time, how they can qualify for relief, and are likely overwhelmed.”

What about the $20,000?

Houlanian said the changes to forbearance policies and the public service debt forgiveness program “collectively should move many people closer to receiving forgiveness,” but the question of Biden’s promised $20,000 in relief lingers.

Oral arguments indicated that the Supreme Court is likely to rule against Biden’s plan, said Shugerman.

The Biden administration justified the plan by saying the HEROES Act, which was enacted in May 2020 to provide pandemic relief, allowed him to cancel student debt. But the federal COVID-19 pandemic expired on May 11.

Shugerman said the administration used the HEROES Act because it was a “faster emergency response,” but noted it had a “weak statutory basis.” He believes that if the administration had used the Higher Education Act of 1965 to justify the plan, their legal grounding would’ve been stronger, but the process would’ve taken much longer, perhaps even years due to mandated negotiation regulations.

“The Higher Education Act basis had a much better chance of surviving litigation compared to the HEROES Act,” Shugerman said.

The strongest way, of course, would’ve been passing a law through Congress, but Biden didn’t have the support to see it through.

If the Supreme Court strikes down the $20,000 forgiveness plan, any further efforts to forgive student loan debt would likely hinge on him being reelected in 2024. 

That’s because, as Shugerman explains, “there's no time left to start over.”