Biden administration forgives $5.8 billion in student loans

The Biden administration will cancel $5.8 billion in federal student loans for 560,000 borrowers. Loans will be forgiven for anyone who attended Corinthian Colleges from its founding in 1995 to its closing in 2015. This is the largest single student loan discharge in history. 

The Department of Education said the now defunct Corinthian Colleges misrepresented job placement rates and students’ ability to transfer credits to other schools. The forgiveness will be automatic, so former students don’t need to apply. 

“As of today, every student deceived, defrauded, and driven into debt by Corinthian Colleges can rest assured that the Biden-Harris administration has their back and will discharge their federal student loans,” U.S. Secretary of Education Miguel Cardona said in a press release.

The Biden administration has now forgiven $25 billion in loans for 1.3 million borrowers. That includes: 

• $7.9 billion for 690,000 borrowers who were taken advantage of by their institutions.
• $6.8 billion for more than 113,000 borrowers through Public Service Loan Forgiveness.
• $8.5 billion for more than 400,000 borrowers with permanent disabilities.

President Joe Biden appears to be moving increasingly closer to student loan forgiveness for all. Someone in the Biden administration has leaked to multiple outlets that the President wants to cancel $10,000 per borrower and do it soon. 

The official White House response: “No decisions have been made yet — but as a reminder no one has been required to pay a single dime of student loans since the president took office.”

Democrats on Capitol Hill have called for erasing $50,000 per borrower. President Biden has said he is not willing to forgive that much and has stuck to his campaign promise of $10,000. 

Payments and interest on student loans have been frozen as a form of COVID-19 pandemic relief. The freeze expires Aug. 31 and the White House has said a decision on future payments will be announced ahead of time.

A recent note from the Federal Reserve stated 60% of borrowers have made no payments since August. The Fed economists said, “it is possible that some of these borrowers may not be ready to resume payments once forbearance expires.” 

The “FEDS Notes” authors warned that borrowers who have not made payments during the pause are far more likely to become delinquent when the freeze ends. They suggested income-based repayment plans will be a good way to keep those borrowers current.