Can President Joe Biden Forgive Student Loans?

UPDATE as of June 30, 2023: The Supreme Court has blocked Biden's student loan debt relief program—which means this forgiveness will not be happening.

Well, it’s finally happening . . . maybe. President Biden recently announced his plan to forgive some student loan debt—up to $20,000 per borrower to be exact.

Let’s be clear, though: No one’s student loans have been forgiven yet. Right now, Biden’s forgiveness plan is still just that—a plan. We don’t know exactly when his plan will take effect and student loan balances will start to go down.

But can President Biden really forgive student loans? Since this is the first time Biden (or any president) has tried to cancel student loan debt with an executive order, there’s a lot of gray area around how much power he has.

Let’s take a deeper look into what Biden has done so far when it comes to student loans and if he can actually forgive student debt without going through Congress.

• What’s Included in Biden’s Student Loan Forgiveness Plan?
• What Has Biden Done About Student Loan Debt as President?
• Can Biden Forgive Student Loans With an Executive Order?
• What Should You Do About Your Student Loans Today?

Biden’s been promising student loan forgiveness since he first campaigned for the presidency. It’s been several years of targeted forgiveness here and there, but he’s finally trying to do what’s never been done before—forgive student loans for the masses.

On August 24, Biden announced his new plan to forgive $10,000 of student debt for any borrower who makes below $125,000 a year and an additional $10,000 for anyone who received a Pell Grant.¹ That’s up to $20,000 of possible forgiveness for any borrower with federal student loans—and the White House estimates about 43 million people will get at least some of their debt forgiven.² Yeah, that’s a lot.

Up until now, the only way to get your student loans forgiven was through one of the federal student loan forgiveness programs already in place, most of which are based on your job and the number of payments you’ve made. And even if you apply, the approval rate for these programs is just plain sad.

But Biden’s plan would cut through all the red tape and immediately forgive some student loan debt for millions. There’s been plenty of talk of sweeping forgiveness before, but this is the first time it’s actually made it past the promise stage. And Biden’s plan is estimated to cost the federal government a ton of money (because student loan forgiveness isn’t free)—which is why many are questioning if the president can just forgive student loan debt with the snap of his fingers.

Also included in his plan, Biden extended student loan relief through the end of the year and introduced a new income-driven repayment plan to help those who are struggling to make their student loan payments.

We’ll get into whether Biden has the power to cancel massive amounts of student loan debt by his word alone or not. But first, let’s take a trip down memory lane and see what the president has done so far when it comes to student loans—and how he was able to do it.

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Before his latest announcement, Biden had already canceled about $32 billion worth of student loan debt as president.³ Keep in mind, most of this forgiveness was because of already-existing federal policies targeted toward very specific student loan borrowers.

He canceled student loan debt through borrower defense to repayment.

If you’ve never heard of this before, you’re not alone. Borrower defense to repayment is a federal law that forgives students’ loans if they went to a school that did some shady stuff. And we’re not talking about the schools that hazed freshmen by making them wear a hot dog costume to class.

We’re talking about schools that dabbled in illegal stuff (like lying about the success of their programs, promising jobs after graduation, or pushing at-risk students to take out student loans). If you need a real-life example, take a look at what happened with ITT Tech and Corinthian Colleges.

Overall, borrower defense or school closing cases have added up to at least $13 billion in student loan forgiveness under the Biden-Harris administration.⁴

He extended student loan coronavirus relief.

On his first day in office, President Biden extended student loan relief through September 2021.⁵ And as the months passed, Biden extended the pause on federal student loan payments and interest again and again—now through December 31, 2022.⁶ But this was only possible because the CARES Act made it possible back in March 2020. If it wasn’t for the coronavirus, student loan relief (and a ton of other things) probably never would have happened.

According to Biden, this latest extension will be the last. So, when those loan payments start again in January, people will need to figure out their plan for paying them off.

He canceled student loan debt for borrowers who have a total and permanent disability.

In August 2021, Biden made some big headlines for canceling $5.8 billion in student loan debt for more than 323,000 borrowers with total and permanent disabilities.⁷ While that’s definitely a big deal for those borrowers, it’s not the whole picture.

See, these borrowers were already entitled to forgiveness under the Higher Education Act of 1965, but they had to get through a heck of a paperwork process to actually have their debt wiped out. Now, because of Biden’s “cancellation,” the Social Security Administration will more easily find these borrowers so their student loan debt can automatically be canceled—with no hoops to jump through to get approved.⁸ So, while Biden technically forgave $5.8 billion in student loans for borrowers with disabilities, he mostly just made the process easier.

And this wasn’t the first time Biden canceled loans for these specific borrowers. Back in March 2021, Biden wiped out $1.3 billion in federal loans for 41,000 people. These folks had gone through the messy paperwork and gotten their loans forgiven previously, but the loans came back—like zombies—just because the borrowers didn’t keep the right people in the loop about their income. The paperwork for this stuff is a mess, and that’s part of the problem the Biden administration wanted to take care of by automatically canceling their debt going forward.

He expanded PSLF with a limited waiver.

The Public Service Loan Forgiveness (PSLF) program isn’t exactly known for being an easy or reliable process. Many borrowers spend years making the required payments and working at an approved employer only to find out they don’t qualify for forgiveness over a minor technicality.

So, in October 2021, Biden made some changes to the PSLF program under a limited waiver.⁹ This waiver temporarily allows payments to count toward PSLF forgiveness that wouldn’t have counted before (like late payments or payments made under the wrong plan). Borrowers have until October 31, 2022, to apply for the waiver and take advantage of the new rules.¹⁰

But how was Biden able to introduce this waiver in the first place? Because of the Heroes Act (which we’ll talk about more in a minute).

So, any student loan forgiveness that’s happened under Biden has either come from enforcing or making minor tweaks to laws that were already in place before he became president. And those laws were approved by Congress.

On the other hand, Biden’s plan to forgive up to $20,000 worth of student loans has definitely not been approved by Congress. Many Democrats have been pushing him to use his executive authority to forgive as much as $50,000 for each borrower. But it’s not super clear if the president has the power to forgive student loan debt with an executive order.

Biden himself has gone back and forth on what he thinks he can actually do. And House Speaker Nancy Pelosi said in July 2021, “People think that the president of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”¹¹

But now Biden’s administration says the Heroes Act gives them the authority to cancel student loan debt. The Heroes Act of 2003 is a law that allows the Secretary of Education to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs” to help borrowers during a national emergency.¹²  Say what? That basically means the Secretary of Education can make changes to the federal student loan program if it will help borrowers financially get through a widespread crisis. But what changes can be made? Well, that’s up for interpretation.

The Heroes Act was created after 9/11 to give student loan relief to those serving in the military. And it’s been used in multiple ways over the years, including pausing federal student loan payments and interest during COVID. But many think it was never meant to cancel mass amounts of student debt—only offer temporary relief for borrowers. The Justice Department’s Office of Legal Counsel argues that reducing the amount of student loan debt for borrowers is a way to help those who financially suffered because of the pandemic and is therefore perfectly legal under the Heroes Act.

But there’s also something called the “major questions doctrine,” which means any interpretation of a vague law that would cause a significant economic or political impact needs to go through Congress.¹³ And yeah, Biden’s plan would have a pretty big economic impact.

So, is student loan forgiveness within the president’s power? As of right now, it seems so. But since many think his plan is overreaching and unconstitutional, there’s a good chance it’ll be legally challenged. In fact, many Republicans are gearing up to do just that.¹⁴ Who would be the one to actually sue the Biden administration? Nobody really knows. But if it does happen, it’ll be up to the Supreme Court to decide if Biden can actually forgive student loan debt without going through Congress.

The bottom line? Either Biden will forgive student loans by the end of the year, or it’ll be decided in court. We know that’s not crystal clear, but one thing’s for sure: Nobody should plan their financial future around promises made by politicians.

Look, it doesn’t matter who’s in the White House. Instead of waiting on the president or any other politician to pay your student loans off, there’s plenty you can do right now to take control of your student loans and your money—no matter your situation.

If Biden’s Plan Will Cancel the Rest of Your Student Loans...

You may have already been celebrating, but you’re not quite off the hook yet. Even if Biden’s forgiveness plan will wipe out the rest of your student loan debt, you still need to proceed with caution. Like we said before, there’s a strong chance his plan will get challenged, and you don’t want to be unprepared if it does.

So, your best bet is to go ahead and fill out the student loan forgiveness application when it’s available (sign up for updates from the Department of Education) and save up the money you would’ve owed anyway. That way, if Biden’s plan doesn’t go through, you can still pay off your loans. And if it does? Well, then you’ve got some extra money to put toward any other debt, savings or whatever Baby Step you’re on. You’ll be sitting pretty either way.

If Not All Your Student Loans Will Be Forgiven...

Got more student loans than what will be forgiven? Hey, we know it can feel super overwhelming—even with the boost from Biden’s plan. But you can make progress faster than you think. You just need to take it one step at a time.

Keep making payments.

Yep, keep paying on your student loans. Because even if Biden’s plan happens, it’s not guaranteed that more debt will be forgiven. In fact, it’s best to plan like it won’t be. And if you’ve got more than $10,000 or $20,000 of student loans, the sooner you can pay down the rest of your balance, the more you’ll save in interest (and stress). The good news is, now’s a great time to make progress because any payments you make until January go straight to the principal balance. Plus, there are plenty of ways to make some extra money and increase your payment.

Get on a budget.

If you’re struggling to make your student loan payments now or you think you will be once they kick back up in 2023, a budget can make all the difference—no matter your income. When you tell your money where to go each month, you have more confidence and control over how fast you’ll be debt-free. It’s just a matter of finding ways to cut back and save so you can throw more money at your loans. And creating a budget is super easy (and free) with EveryDollar!

Have a game plan.

Okay, so you’re making payments and sticking to a budget. But what’s the best way to make progress on your student loans? After all, you don’t want to carry your debt around for decades (which is what happens on some payment plans). If you’re sick and tired of your student loans, it’s time to get serious about getting them out of your life. The Ultimate Guide to Getting Rid of Student Loan Debt will show you how. This course helps you explore your options and walks you through our proven plan to pay off your student loan debt fast.

Because you shouldn’t leave your financial success up to a president, politician or anyone else. You have what it takes to knock out your student loans and take control of your money once and for all!