The Biden Administration's Evolving Approach to Student Loan Repayment

The Biden administration has navigated a complex landscape regarding student loan repayment, marked by both significant policy shifts and legal challenges. This article examines the administration's actions, including pauses on debt collection, forgiveness programs, and the development of new repayment plans, while also addressing the criticisms and legal obstacles encountered along the way.

Pauses on Collection of Defaulted Federal Student Loan Debt

Initially implemented as a temporary measure during the Trump administration in response to the COVID-19 pandemic, the pause on the collection of defaulted federal student loan debt was extended through bipartisan legislation and administrative action under the Biden administration. This pause included the Treasury Offset Program, which allowed tax refunds to be applied to a borrower’s outstanding defaulted federal student loan debt.

However, the Trump administration restarted the Treasury Offset Program in May 2025, signaling a return to standard collection practices. The Biden administration subsequently reversed this decision, reviving and extending the pandemic-era pause. This decision could result in a loss of up to $5 billion per year in collections and lead to an increase in overall loan balances. Critics argue that such measures lack justification in the absence of a pandemic, financial crisis, or deep recession, and undermine efforts to resume debt collection.

Student Loan Forgiveness Initiatives

The Biden administration has pursued various student loan forgiveness initiatives. The Department of Education (ED) approved student loan forgiveness for 4,550 borrowers through the Income-Based Repayment (IBR) plan, totaling $600 million. Furthermore, ED approved forgiveness through borrower defense to repayment for 4,100 borrowers who attended DeVry University.

Earlier in the year, the Biden administration announced new approvals for student loan debt forgiveness for over 150,000 borrowers through borrower defense, Public Service Loan Forgiveness (PSLF), and total and permanent disability discharges.

On August 24, 2022, President Joe Biden announced that his administration would forgive up to $10,000 in student loan debt for millions of borrowers. Additionally, Pell Grant recipients would be eligible for up to $20,000 in debt cancellation. This forgiveness was limited to individuals earning less than $125,000 per year and married couples making under $250,000 per year. Only federal student loans with an outstanding balance as of June 30, 2022, were eligible. Students enrolling after this date and those with loans first disbursed after June 30, 2022, were not eligible for this forgiveness. Borrowers who consolidated federal loans into private loans are also ineligible.

Challenges to Loan Forgiveness Plan

On May 24th, the House Republicans passed a resolution to overturn President Biden’s student debt relief plan. The proposal, estimated to cost around $400 billion, was also considered by the Supreme Court. The measure was brought under the Congressional Review Act (CRA), which allows Congress to suspend executive actions taken by the president.

Ultimately, the Supreme Court decision meant that the Administration could not move forward with the one-time student debt relief plan announced last year.

Income-Driven Repayment (IDR) and the SAVE Plan

The Biden administration has focused on income-driven repayment (IDR) plans as a key strategy for making student loan repayment more affordable. ED completed the IDR payment count adjustment, correcting eligible payment counts on borrowers’ accounts. Borrowers can now track their IDR payment progress on StudentAid.gov.

The Administration also created the Saving on a Valuable Education (SAVE) Plan to provide a more affordable repayment option. The SAVE Plan was designed to cut monthly payments to $0 for borrowers making $32,800 or less individually (or $67,500 for a family of four) and save all other borrowers at least $1,000 per year. It also aimed to prevent runaway interest that leaves borrowers owing more than their initial loan.

Read also: Biden's Student Loan Plan

However, the Department of Education announced a proposed joint settlement agreement with the State of Missouri that would end the Biden Administration’s illegal ‘Saving on a Valuable Education’ (SAVE) Plan. According to Under Secretary of Education Nicholas Kent, "For four years, the Biden Administration sought to unlawfully shift student loan debt onto American taxpayers, many of whom either never took out a loan to finance their postsecondary education or never even went to college themselves, simply for a political win to prop up a failing Administration."

The District Court for the Eastern District of Missouri enjoined parts of the illegal SAVE Plan, and Court of Appeals for the Eight Circuit enjoined implementation of the entire SAVE Plan, which required the agency to end the 0% interest rate.

The Department has also agreed to hold a negotiated rulemaking session to remove the SAVE Plan from federal regulations, with the exception of the forbearance and deferment provisions that were included in the final SAVE Plan rule that will continue to count for Income-Driven Repayment (IDR) forgiveness purposes.

There are currently more than 7 million borrowers enrolled in the illegal SAVE Plan and 450,000 borrowers who have expressed interest in enrolling in the plan who will be impacted by the settlement agreement.

The Repayment Assistance Plan (RAP)

The Department is working on the loan repayment provisions of the One Big Beautiful Bill Act. This law created a new IDR plan, the Repayment Assistance Plan (RAP), that will be available to borrowers by July 1, 2026. For loans taken out after July 1 of this year, borrowers will only have two repayment plans to choose between: a new standard plan (which is different from the current standard plan) and one income-driven repayment plan.

One major change Congress implemented with RAP is the elimination of negative amortization, or the possibility for loan balances to grow when interest accumulates faster than monthly payments can cover.

Changes to Loan Forbearance

For loan forbearance, the amount of time that borrowers can delay payment is shrinking. Current rules allow them to pause payments for up to a year at a time and up to three years total.

Addressing Closed School Discharges

ED has determined that several schools closed under “exceptional circumstances.” This determination warrants allowing borrowers who didn’t complete and were enrolled in the school more than 120 days prior to its closure to qualify for a closed school discharge. ED has directed Federal Student Aid (FSA) to make these borrowers aware of their eligibility and to allow automatic discharges for those affected by the outlined school closures.

The schools include:

To May 6, 2015, for all campuses owned at the time by the Career Education Corporation, which have since closed. That is the day CEC announced it would close or sell all campuses except for two brands.
To October 17, 2017 for all campuses owned at that point by the Education Management Corporation, and that later closed. That is the day EDMC sold substantially all of its assets to Dream Center Educational Holdings.
To December 16, 2016, for campuses owned by the Education Corporation of America (ECA) on that date that closed.
To April 23, 2021, for Bay State College.

Return to Repayment

Under legislation enacted by Congress, the student loan payment pause is ending. Interest will begin accruing on September 1, and payments will be due in October. To help borrowers successfully return to repayment, the Department is creating a temporary on-ramp to protect borrowers from the worst consequences of missed, late, or partial payments, such as negative credit reporting.

Congressional Oversight and Concerns

The House Education and Workforce Committee held hearings to address the implications of President Biden’s policies on student loans. Concerns were raised about the Department of Education exceeding its authority and implementing comprehensive reforms without congressional authorization, such as the multiple extensions of the student loan repayment moratorium and the announcement of universal student loan cancellation.

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