The Biden administration’s newly unveiled loan-forgiveness plan could help teachers who went into debt to complete their training—if it survives regulatory scrutiny.
The plan would couple a variety of strategies, including forgiving loan amounts and forgiving interest payments, affecting about 30 million people in all.
The U.S. Department of Education hasn’t yet issued a regulation detailing the various components, but the administration wants to roll out the relief as soon as this fall.
Student debt has been the Biden administration’s top higher education priority, but it has thus far faced major political headwinds. Last June, the U.S. Supreme Court struck down the administration’s plan to forgive student debt to the tune of $400 billion, which would have canceled loans across the board.
But since then, the administration has taken smaller and more targeted action to address the growing problem of student debt.
Under the Public Service Loan Forgiveness program, which includes educators in public schools, the administration canceled $5.8 billion in student debt in March 2024. Educators have also seen their loan repayments drop under a new income-driven repayment plan, called Saving on Valuable Education, launched in August 2023. That plan is more generous than most such plans and now serves 8 million borrowers.
The new plan will specifically target five categories of borrowers:
- Those whose loans have ballooned to more than the amount they initially borrowed. The government will forgive up to $20,000 in interest payments accrued on their loans, regardless of income. People making less than $120,000 a year, or couples making less than $240,000, would qualify to have all their interest forgiven.
- Borrowers who qualify for automatic loan waivers but haven’t applied to a loan-forgiveness program yet will have their debt waived without having to apply under the new program.
- Former students who took out loans over 20 years ago for undergraduate degrees and 25 years ago for a master’s degree and are still paying them back will have their entire debt canceled.
- Student loans taken out for colleges that lost their certification, closed without notice, or provide “low value” programs that don’t qualify holders for better jobs will be forgiven in full.
- Borrowers burdened with high child-care costs or medical expenses can also apply to get their loans waived.
But the plan leaves out a key group—recent borrowers who have been consistently repaying their loans.
“That’s the strange thing about this plan. If you’re an educator and you’ve been making repayments under SAVE or any other IDR [income-driven repayment] plan, this isn’t going to do much for you. You may already be eligible for loan forgiveness in the next few years. This new plan doesn’t do anything to bring down your monthly repayments,” said Jason Delisle, a senior fellow at the Center for Education Data and Policy at the Urban Institute, a nonprofit research organization.
Delisle noted the bulk of the new program is aimed at interest accrued by borrowers who stopped paying—or were unable to make repayments—on their loans.
“You have to essentially owe more than you borrowed to qualify for this [new] plan. This is targeting a different category of borrower outside the normal student-loan repayment programs.”
Educators at all stages could benefit, if they haven’t kept up with repayments
The government estimates that there are over 25 million such borrowers who are dealing with debt amounts inflated by runaway interest. Some educators will be part of this group of borrowers, though its unclear how many.
In 2020, the National Education Association, the country’s largest teachers’ union, reported that 45 percent of the 2,000 educators they surveyed had taken out student loans; half of those borrowers, on average, still owed $58,000 in unpaid loans.
“Educators have been repaying their debt for decades. They’ve taken predatory loans and haven’t even been able to pay back the interest yet. Loan forgiveness can change lives,” said Rebecca Pringle, the president of NEA, which supports the Biden administration plan.
Outstanding loans impact educators’ decisions to buy houses, start families, and save for their retirement, Pringle said. For early- to midcareer educators, loan forgiveness could be the difference between staying in the teaching profession or dropping out of it.
Teacher morale begins to dip in years 3-9 on the job, recent EdWeek Research Center data show. Teachers feel overburdened, underpaid, and underappreciated.
“If teachers aren’t being compensated well, loan forgiveness can at least alleviate their financial stress. Anything that can bring down their monthly payments will help,” said Tara Thomas, a policy analyst with AASA, the School Superintendents Association.
The new forgiveness plan would also be a refreshing change for educators who often must jump through bureaucratic loops to access loan forgiveness.
“Instead of a patchwork of programs, debt waivers can become automatic. Teachers have lost hope [in the past] because they don’t want to deal with the administrative burden [of applying],” Thomas said.
Professional associations like the NEA and AASA have been hosting awareness drives for educators, especially to leverage repayment plans under the Public Service Loan Forgiveness program. Thomas said the government has implemented several permanent fixes to the PSLF, which has made it easier for educators to repay their loans toward a complete waiver.
Educators close to retirement will also benefit from this new program, said Pringle, as 25 percent of them still have unpaid debt from their student loans. A third of these educators still owe more than $45,000 and work well past their retirement age to pay these loans off, the union’s analysis showed.
However, all these automatic interest waivers only kick in for educators who haven’t already been repaying their debt under SAVE or another such plan.
The new plan could be challenged, too
The Biden administration hascited its authority under the Higher Education Act to roll out the plan, hoping to avoid the fate of its earlier crack at loan debt.
Delisle said the new plan could still be politically vulnerable for different reasons—it aims to forgive accrued interest for a very broad range of student borrowers without any relief for those who are already paying back their student loans on time.
The plan will also run headlong into existing arguments that loan forgiveness is an unfair burden on taxpayers who haven’t taken out student loans. And some states are already suing to stop the SAVE interest-driven repayment plan.
Even without a legal challenge to its proposed reach, the new plan will take at least a few months to become a regulation.
