Biden's Attempts To Forgive Student Debt Were a Disaster

In the January 2025 issue of Reason, we’re giving performance reviews of Joe Biden’s presidency. Click here to read the other entries.

Biden’s changes to education policy are among the central achievements of his first—and only—term in office. Chief among them are his sweeping reforms to the federal student loan program, increasing opportunities for debt forgiveness. While the largest of these changes has now been blocked in court, Biden has nonetheless managed to forgive billions in federal student loans.

In August 2022, Biden announced a blanket forgiveness of up to $20,000 in federal student loans for single borrowers earning less than $125,000 or couples earning less than $250,000. This plan—estimated to cost over $500 billion—was swiftly blocked in federal court, and the Supreme Court later struck it down as an unconstitutional exercise of the spending power.

While Biden couldn’t quite bring home the grand prize, he managed to cancel billions in student loans through now-blocked changes to the federal student loan program. Unsurprisingly, these changes also led to a big increase in the estimated 2024 federal deficit—a $145 billion hike.

The seminal achievement of Biden’s student loan overhaul was the introduction of the Saving on a Valuable Education (SAVE) plan, an income-driven repayment plan that dramatically reduces most borrowers’ monthly payments. Under the previous version of the program, borrowers were directed to pay 10 percent of their discretionary income (calculated as earnings above 150 percent of the federal poverty rate) for 20 years before receiving forgiveness. Borrowers will now pay just 5 percent of their discretionary income (now estimated as earnings more than 225 percent of the federal poverty level), with some receiving forgiveness after only 10 years. While the program was estimated to cost taxpayers nearly $500 billion over the next decade, federal courts fully blocked the program by July 2024.

If somehow allowed to go forward, the SAVE plan would be likely to incentivize students to take on much larger student loan balances, because the program requires borrowers to pay so little back before forgiveness. Ultimately, it’s difficult to see how this extra spending doesn’t encourage colleges to hike tuition.

Biden’s Education Department has also jeopardized millions of college students’ access to financial aid. The Free Application for Federal Student Aid (FAFSA) form is something anyone seeking federal grants or loans—or institutional aid at most colleges—is required to complete. The Education Department’s updated version of the form was riddled with technical bugs, making it nearly impossible for millions of students and parents to complete. In 2024, there was an 11.2 percent year-over-year drop in completed applications from high school seniors. By contrast, high school applications declined only 4.8 percent during the COVID-19 pandemic.

Biden’s Education Department made changes beyond the world of student loans. In 2022, it released a series of major changes to Title IX policy, with rules finalized in April. Their largest impact involves due process for students facing sexual assault allegations. The new rules removed Trump-era protections for accused students, such as a live hearing and the ability to have a representative cross-examine the accuser. Under the new regulations, most schools will be directed to use the “preponderance of the evidence” standard, meaning students will be found responsible for assaulting classmates if just 51 percent of the evidence points to their guilt.

In all, Biden’s Education Department has been abysmal for anyone who cares about fiscal health, due process, or basic competence.

Education policy performance review: D-, see me after class

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