In a significant shift, President Joe Biden’s administration is stepping back from its plan to cancel student loans for more than 38 million Americans. This move signals a broader strategy to withdraw unfinished regulations before President-elect Donald Trump takes office, preventing the incoming administration from quickly retooling them to advance its own agenda.
Despite this decision, the Biden administration continues to provide targeted relief through existing programs. On Friday, the Department of Education announced an additional 55,000 borrowers would receive loan forgiveness through the Public Service Loan Forgiveness (PSLF) program.
Why Is Biden Withdrawing the Plan?
As the administration nears its end, federal agencies are racing to finalize or pull back pending regulations. Leaving unfinished rules on the table could allow the Trump administration to rewrite and implement them more quickly.
“This isn’t the way I wanted it to end,” said Melissa Byrne, a prominent student debt cancellation activist. “Unfortunately, this is the most prudent action to take right now.”
Byrne criticized Republican lawmakers for what she described as efforts to maintain working-class Americans in debt. However, Biden’s administration emphasized its commitment to helping borrowers transition back to repayment following the pandemic-related payment pause.
Student Loan Relief: What’s Next?
While Biden’s broader cancellation efforts faced legal and political obstacles, his administration has erased $180 billion in student loans through existing programs.
Key highlights include:
- Public Service Loan Forgiveness (PSLF): Forgives loans for borrowers who work in government or nonprofit roles for 10 years. Friday’s announcement included $4.28 billion in relief for 55,000 teachers, nurses, law enforcement officers, and other public service workers.
- Targeted Relief Efforts: Programs for borrowers facing medical hardships, child care costs, or those who have been repaying loans for 20+ years.
Biden stated, “Millions of people now have the breathing room to start businesses, save for retirement, and pursue life plans they had to put on hold because of the burden of student loan debt.”
What Does This Mean for Future Borrowers?
The Biden administration’s two major student loan proposals are now being withdrawn:
- April Proposal: Aimed to provide targeted relief for 30 million Americans, including those whose loan balances ballooned due to interest and borrowers repaying loans for over 20 years.
- October Proposal: Allowed the Education Department to cancel loans for individuals facing financial hardships, such as medical bills or child care costs.
Both proposals faced legal challenges, including a federal judge halting the April rule after lawsuits from Republican-led states.
With these rules withdrawn, Trump’s administration could propose its own policies. However, such changes would require restarting the rulemaking process, which can take months or even years.
Transgender Sports Rule Also at Risk
Another regulation at risk of withdrawal is Biden’s 2023 transgender sports rule, which aimed to prevent schools from issuing outright bans on transgender athletes. The rule allowed for exceptions based on fairness in competition or injury risk but faced delays amid Republican backlash.
President-elect Trump has campaigned on banning transgender athletes from competing in women’s sports, framing it as a key issue in his platform.
A Complex Landscape for Policy Change
Biden’s decision to withdraw pending regulations highlights the challenges of relying on executive actions and federal rules to implement policy changes. While effective in bypassing congressional gridlock, such measures are vulnerable to shifts between administrations.
As federal agencies evaluate which rules to finalize before January, borrowers and advocates alike are left wondering how Trump’s administration will reshape the student loan landscape.
What Borrowers Can Do Now
If you’re navigating student loans, here’s what you should focus on:
- Stay Updated on PSLF: If you work in public service, ensure you meet the requirements for loan forgiveness.
- Prepare for Repayment: Payments have resumed after the pandemic pause, so review your repayment plan to stay on track.
- Explore Hardship Options: Borrowers struggling with financial challenges may still qualify for targeted relief.
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