Biden Eyes Sweeping Changes to ‘Broken’ Student Loan System

Biden Eyes Sweeping Changes to ‘Broken’ Student Loan System

Despite Biden's actions, the nation’s student loan debt has continued to surge.


The Biden administration on Wednesday proposed several wide-ranging changes to the federal student loan system, including measures that limit interest capitalization rates and help discharge loans for permanently disabled borrowers.

“We are committed to fixing a broken system. If a borrower qualifies for student loan relief, it shouldn’t take mountains of paperwork or a law degree to obtain it,” Education Secretary Miguel Cardona said in a statement.


“Student loan benefits also should not be so hard to get that borrowers never actually benefit from them,” he continued.

Another key aspect of the proposal will make it easier for borrowers to file and pursue claims of predatory practices by colleges.

“Whether it is for closed school discharges, borrower defense claims, PSLF (Public Service Loan Forgiveness program), or relief after a total and permanent disability, borrowers have had to navigate narrow rules and a needlessly complicated system,” James Kvaal, the under secretary of education, said in a statement.

“The regulations we’ve proposed today would remove many of those barriers and help create a federal student loan system that works better for borrowers,” he added.

According to Fox Business, the Department of Education is aiming to finalize the proposed changes by November 1.

Since taking office, President Biden has canceled nearly $26 billion of student loan debt for more than 1.3 million borrowers. Despite these actions, the nation’s student loan debt has continued to surge, reaching about $1.75 trillion as of April, according to data compiled by the Federal Reserve Bank of St. Louis.

Last month, the White House announced that it would cancel the federal student loan debts of about 200,000 borrowers who claimed in a class-action lawsuit that they were defrauded and misled by their schools. The Sweet v. Cardona settlement is expected to cancel a total of $6 billion of student loan debt. That settlement follows another announcement earlier last month that the Education Department would forgive the remaining $5.8 billion of student loan debt for 560,000 borrowers who attended schools operated by Corinthian Colleges.

Biden is also mulling whether to move ahead with broad-based student loan forgiveness. For months, lawmakers like Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) have pushed Biden to sign off on canceling $50,000 of student loan debt per borrower. The president, however, has indicated that he likely won’t go higher than his campaign promise of $10,000 per borrower.

“I am considering dealing with some debt reduction,” Biden told reporters at the White House in May.

“I am not considering $50,000 debt reduction. I am in the process of taking a hard look at whether or not there will be additional debt forgiveness and I will have an answer on that in the next couple of weeks,” he added.

Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters.