Biden's Latest Loan Forgiveness Sparks Fresh Calls to Cancel All Student Debt

Borrowers and their allies renewed calls for the Biden administration to wipe out all federal student debt on Thursday after the U.S. Department of Education announced $1.1 billion in loan forgiveness for 115,000 people who left the now-defunct ITT Technical Institute chain before graduating.

Alexis Goldstein, Open Markets Institute's director of financial policy, called the development "a great step," tweeting that "it's a relief that many scammed former students of ITT Tech will be getting long overdue relief."

"Broad-based student debt cancellation is still needed. And doing so while payments are paused is the right time to do it," added Goldstein, referencing that federal student loan payments are paused through the end of January 2022 due to the ongoing coronavirus pandemic.

Melissa Byrne, a Philadelphia-based progressive political strategist, also responded to the news on Twitter, asking: "Is this like biking with training wheels? Take off the training wheels and #CancelStudentDebt--all of it."

"You can't nickel and dime justice," Byrne also said, warning of moves that leave most borrowers behind.

The Associated Pressexplained that while "students are usually eligible for loan forgiveness if they attended a college within 120 days of its closure and were unable to complete their degrees," in this case the Education Department is extending that window back to March 31, 2008, several years before ITT Tech closed in 2016.

The department estimates that 43% of the affected ITT Tech borrowers are currently in default.

"For years, ITT hid its true financial state from borrowers while luring many of them into taking out private loans with misleading and unaffordable terms that may have caused borrowers to leave school," U.S. Secretary of Education Miguel Cardona said in a statement Thursday.

"Today's action continues the department's efforts to improve and use its targeted loan relief authorities to deliver meaningful help to student borrowers," he said. "At the same time, the continued cost of addressing the wrongdoing of ITT and other predatory institutions yet again highlights the need for stronger and faster accountability throughout the federal financial aid system."

The administration's latest move brings the total amount of loan cancellation approved since January--when President Joe Biden took office--to $9.5 billion, which has benefited more than 563,000 borrowers, according to the department.

Eileen Connor, director of the Project on Predatory Student Lending at the Legal Services Center of Harvard Law School, welcomed the "good news" but also said that "the exact reasoning used by the department in expanding this look back period also demonstrates why all ITT loans need to be canceled."

Noting that "one of ITT's notorious scam tactics" was talking students into "multiple degrees and a mountain debt," Connor pointed out that it has been five years since the chain shut down in the face of "overwhelming evidence of wrongdoing, yet the department still has not addressed the more than 700,000 borrowers with over $3 billion in fraudulent debt from ITT."

Connor's call for additional action from the Biden administration was echoed by Abby Shafroth, staff attorney with the National Consumer Law Center's Student Loan Borrower Assistance Project.

Shafroth said that though the new relief action "will make a tremendous difference in the lives of the many borrowers who withdrew from ITT once they realized that the school had sold them a bill of goods," it still "left out hundreds of thousands more ITT students who were subject to the same misconduct."

"The department should use its existing authority to cancel all federal student debt taken out to attend ITT," she added. "And the department should not stop there--ITT is hardly the only school that took advantage of the federal student loan system and ITT students are hardly the only borrowers who have suffered from a broken student loan system. Millions of borrowers are still waiting for President Biden to make good on his promise to provide widespread student loan cancellation, and the time to act is now."

Thursday's move came a week after the Biden administration canceled $5.8 billion in federal student debt held by over 300,000 people with severe disabilities--a decision that, as Common Dreams reported, also sparked calls for broader loan forgiveness.

The administration's piecemeal approach to the nation's student debt crisis has led some to ask, as Eric Levitz wrote last week for Intelligencer, "Has Biden abandoned wide-scale student-loan forgiveness?"

Acknowledging the Education Department's ongoing review of the president's authority on the matter, Levitz posited that "blanket loan forgiveness remains possible. But in all likelihood, the Biden presidency will yield only small-bore reforms that deliver relief to specific kinds of borrowers, while most will carry on bearing the burdens of America's inefficient, scam-ridden system of higher education."

Biden, who campaigned on canceling up to $10,000 in student loan debt, has resisted pressure from progressive lawmakers--led by Senate Majority Leader Chuck Schumer (D-N.Y.), Sen. Elizabeth Warren (D-Mass.), and Rep. Ayanna Pressley (D-Mass.)--to make that figure $50,000.

The trio continues to push the president on the issue, with Warren tweeting Thursday morning that "after the 2008 financial crisis, young people were shoved into a weak job market and plunged even deeper into student debt. Many never recovered financially. We must do better this time and #CancelStudentDebt."