What is Biden’s Long-Term Student Debt Strategy? Joe Biden’s Department of Education announced on Tuesday a fresh round of student loan debt cancelation, wiping the debt of 208,000 students who attended the ITT Technical Institute, a defunct educational institution founded in 1969. The surprise announcement brings the total amount of loan cancelation for the Joe Biden administration to almost $32 billion.
Many former ITT Technical Institute students were already eligible for debt cancelation, after the facility lost its federal funding over failures to meet accreditation standards. However, the latest move means that all remaining federal student loans for borrowers who attended ITT Tech from January 1, 2005, to its closure in September 2016 will be automatically wiped.
In a statement, Secretary of Education Miguel Cardona stressed the Biden administration’s commitment to ensuring students are not burdened with debt from an institution that made “false promises.”
“It is time for student borrowers to stop shouldering the burden from ITT’s years of lies and false promises,” he said. “The evidence shows that for years, ITT’s leaders intentionally misled students about the quality of their programs in order to profit off federal student loan programs, with no regard for the hardships this would cause.”
Here’s Who Is Eligible
All former ITT Tech students with federal loans are eligible for debt cancelation under the latest proposal, so long as they have not previously applied for any relief through the Department of Education’s “Borrower Defense to Repayment” scheme. Under the program, anybody who proved that they were defrauded by their college is eligible to have their debt wiped.
There may be some former students who still have outstanding debt who may not qualify for cancelation under the latest announcement if they attended the college before January 2005 – although, these students may see further debt cancelations down the line.
The Department of Education has not given an exact timeline of when the debt will be canceled, but previous announcements like this saw debt cancelations start rolling out within a matter of weeks.
Will Biden Extend Loan Payment Freeze?
As millions of student loan borrowers prepare to begin making repayments in August, when the COVID-era federal student loan pause expires, many are left wondering whether the Biden administration or congressional Democrats will step in to extend the repayment relief.
Following Tuesday’s debt cancelation announcement, Education Secretary Miguel Cardona told CBS Mornings that conversations are taking place in the White House to discuss the payment freeze.
“While I don’t have an announcement here today, I will tell you we’re having conversations daily with the White House, and borrowers will know directly and soon from us when a decision is made,” Cardona said.
Jack Remondi, the CEO of Navient, an organization that services and collects student loans, said this week that he believes the White House is preparing to extend the repayment freeze. During an earnings call on July 27, Remondi said he doesn’t believe the president will allow repayments to begin on September 1.
“I guess our sources are the same as yours, what we read in the press and what our — some of our former colleagues in the direct-loan servicing business talked to us about,” Remondi said.
“And that has just been that the department has said don’t communicate with customers yet. I think given where we are in the calendar and the end date of Aug. 31, it’s hard for us to believe that it does not get extended.”
Some legislators are pushing Biden not only to extend the repayment freeze, but to wipe student loan debt to the tune of $50,000. Should the president go ahead with that plan, however, he would be faced with a whole new problem – the question of whether current and future students will be expected to make loan repayments, and whether higher education will be subsidized by the federal government in the future.
It wouldn’t be surprising if President Biden goes ahead with a broader debt cancelation plan, having campaigned in 2020 on the promise of wiping as much as $10,000 in federal student loan debt per borrower.
Jack Buckby is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and reports on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.