More than $116 billion in federal student loans has been forgiven by the Biden administration, about the size of SNAP benefits, or two Justice Departments.
After the Supreme Court struck down the White House’s $430 billion student-debt cancellation plan last month, President Biden gave a press conference where he said, essentially, that he would keep trying to do it, anyway. On Friday, the Department of Education announced that it was forgiving $39 billion in student loan debt for 804,000 people — amounting to nearly one in every ten dollars that it was planning to wipe out. This brings the total amount of federal student loan debt eliminated since 2021 to $116 billion, and largely for the poorest borrowers. That’s a huge amount of money — far more than any other administration has zeroed out. And it looks like hundreds of billions of dollars’ worth of additional student-loan amnesty is on its way. Elimination has quietly grown so large, and so quickly, that it’s effectively become a new federal assistance program of its own under the Biden administration — one that’s about the size of the annual federal SNAP food-benefits budget.
To understand what is happening with federal student loans, it helps to understand what they are, and how the government thinks of and uses them. Most federal student debt is paid back with interest, meaning that borrowers would ultimately pay back more than what they first took out, barring a default or forgiveness. Whether interest on these loans is a good thing, or if it even makes sense, has been a subject of debate for years. In reality, most of that money just goes toward running the program, including paying servicers a small fee per person to collect those outstanding debts. The costs add up: A recent Government Accountability Office report found that the federal government loses money by lending to students, thanks to already-existing forgiveness programs and the pandemic-era pause on payments.
