The Biden administration has withdrawn two proposed plans aimed at broad student loan forgiveness, just weeks before President-elect Donald Trump takes office. The move effectively ends the administration’s attempts to deliver substantial debt relief to millions of borrowers through regulatory action, following the Supreme Court’s rejection of its initial, larger-scale forgiveness program in .
The regulations, which were slated to be published in the edition of the Federal Register, would have potentially canceled student loans for borrowers who had been in repayment for decades and those experiencing financial hardship. The combined policies were projected to reduce or eliminate education debt for a significant portion of the over 40 million Americans carrying student loan debt.
According to the Education Department, the withdrawal is due to “operational challenges in implementing the proposals.” In a statement, the department indicated it would now focus its “limited operational resources” on assisting borrowers at risk of failing to resume repayment as the current pause on payments nears its end. This shift in priority comes as the administration faces increasing pressure to ensure a smooth transition back into repayment for the millions of borrowers who have benefited from the pandemic-era forbearance.
The decision to abandon these plans, often referred to as a “Plan B” after the Supreme Court ruling, has drawn criticism from consumer advocates who fear it leaves millions of borrowers without a viable path to relief. The original plan, struck down by the Court, aimed to forgive up to $20,000 in debt for Pell Grant recipients and $10,000 for other borrowers. The Court’s decision hinged on the argument that the administration lacked the authority to implement such a broad cancellation program without explicit congressional authorization.
Higher education expert Mark Kantrowitz suggests the Biden administration anticipated the challenges these proposals would face under a Trump administration. Trump has been a vocal opponent of student loan forgiveness, labeling Biden’s efforts as “vile” and “not even legal” during his campaign. His likely veto power over any future attempts at broad forgiveness through legislation further contributed to the administration’s decision, according to Kantrowitz.
The withdrawal of these plans doesn’t signal a complete halt to student loan relief efforts, however. The Biden administration has also pursued targeted forgiveness programs, including those for public sector workers. Just days before the withdrawal of the broader plans, on , President Biden announced plans to cancel student debt for approximately 55,000 public sector workers, amounting to roughly $4.3 billion in relief. This initiative leverages existing income-driven repayment (IDR) plans and Public Service Loan Forgiveness (PSLF) programs.
The IDR plans, which tie monthly payments to a borrower’s income and family size, have been a key component of the administration’s strategy to make student loan repayment more manageable. The PSLF program offers forgiveness to borrowers who work full-time for qualifying public service employers after making 120 qualifying payments.
Despite these targeted efforts, the cancellation of the broader plans represents a significant setback for borrowers hoping for substantial debt relief. The administration’s focus now appears to be on refining existing programs and ensuring a smoother transition back into repayment, rather than pursuing large-scale forgiveness initiatives. This shift in strategy comes as the economic outlook remains uncertain and concerns about the potential impact of widespread debt cancellation on the federal budget continue to linger.
The Supreme Court’s decision in underscored the legal constraints facing the administration in its efforts to address the student loan crisis. The ruling highlighted the need for congressional action to provide a more permanent and comprehensive solution. However, with a divided Congress, the prospects for such legislation remain uncertain. The administration has indicated it will continue to explore all available options to provide relief to borrowers, but the path forward is likely to be more incremental and targeted than previously envisioned.
The cancellation of these plans also comes amidst broader economic developments, including a recent Supreme Court ruling that invalidated most of the Trump administration’s tariffs. While seemingly unrelated, both decisions highlight the complex interplay between executive authority, legal challenges, and economic policy. The invalidation of the tariffs, for example, could have implications for trade and inflation, potentially influencing the broader economic context in which student loan repayment is occurring.
Borrowers awaiting relief under the withdrawn plans are now left to navigate existing repayment options and explore potential eligibility for targeted forgiveness programs. The Education Department has emphasized its commitment to providing support and resources to borrowers as they resume repayment, but the absence of broad forgiveness leaves many facing continued financial challenges.
