Yesterday I updated AEI’s Student Debt Forgiveness Tracker to incorporate new data from the Department of Education on Public Service Loan Forgiveness (PSLF) in April, May, and July. The tracker total now sits at an incredible $317 billion. With more forgiveness from current sources already in the works, and new sources of forgiveness planned by the Biden administration, there are three simple takeaways from this updated total.
The first takeaway is that this $317 billion total is not some future prediction, it is the forgiveness that has already gone out. The tracker collects federal student debt forgiveness as it occurs, and tallies cumulating forgiveness over both the Trump and Biden administrations. This enormous total is hard to conceptualize, but it is more than a third of last year’s US military spending, and well over triple the amount the federal government spends on education. To capture this amount in spatial terms, imagine a stack of $100 bills stretching 26.2 miles, the length of a marathon. Now imagine seven more, and you are closing in on $317 billion.
Forgone Federal Student Loan Revenue by Category
The second takeaway is that, despite what many might have assumed after Biden’s marquee forgiveness proposal was defeated at the Supreme Court, more forgiveness is in the works. The Biden administration announced last month that in the coming weeks, another $39 billion in forgiveness would come from a one-time Income Driven Repayment account adjustment. (That measure is already the subject of a lawsuit.) Hundreds of billions in expected forgiveness could come over the next 10 years from Biden’s proposed SAVE repayment plan, which substantially alters the terms of income driven repayment. And the administration continues a doubtful push to get a blanket cancellation like the one the court ruled against, but to do it through a different legal authority. While $317 billion is a huge sum, the administration is pushing for more full steam ahead.
The third takeaway is that we are at risk of becoming desensitized to these enormous forgiveness amounts. This week’s mid-month update came from updated forgiveness from PSLF. The average amount forgiven in the updated numbers was an astonishing $73,400 for nearly 170,000 borrowers. In June, the last month reported, over $500 million was forgiven through PSLF. Half a billion is a great deal of money, but in the scope of loan forgiveness, it’s a shrug. That $500M only accounts for 4 percent of PSLF forgiveness from the last quarter, and about 1 percent of PSLF captured in the tracker, and less than 0.2 percent of the tracker total.
Putting all these points together paints the debt forgiveness project in sharp relief. It is a real expression of the old saw, “Half a billion here, half a billion there, and pretty soon you are talking about real money.” Pretty soon, we will be talking a third of a trillion dollars, and the Biden administration is pushing for more.