VERIFY: Yes, the recent student debt forgiveness change is just a tiny fraction of total student debt

Borrowers defrauded by their schools could see all of their direct federal student loans canceled.
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Last week, the Department of Education announced a change that was largely summarized as the cancellation of $1 billion in student loan debt. The announcement garnered attention because of the Biden administration’s past discussion of student debt forgiveness.

But some pointed out that the Department of Education’s decision would only affect a small number of student borrowers and that it would barely dent a nationwide student debt total of more than $1.69 trillion.


Is the Biden administration canceling $1 billion in student loan debt and who would see that debt forgiveness? 


viral tweet displayed a pie chart to showcase that the total amount of canceled debt was small compared to the total sum. Meanwhile, many social media users have debated the merits of the program based on headlines that don’t really capture the whole picture.


The Department of Education is changing a formula used to calculate partial debt relief to already-approved borrowers defrauded by schools. The DoE estimates this will help approximately 72,000 borrowers receive $1 billion in relief.

Total student loan debt across the United States is approximately $1.71 trillion, $1.56 trillion of which is federal student loans. There are about 43.2 million people in the United States with student loan debt.


To understand who is affected by the DoE changes, we have to first understand what is being changed.

In December 2019, the Department of Education under Betsy DeVos announced a new methodology in calculating debt relief for graduates defrauded by their schools. The methodology compared graduates’ earnings to median earnings in their field to calculate whether they would receive full debt relief, 75% relief, 50% relief or 25% relief. While some applicants could be rejected relief entirely, the DoE at the time placed particular emphasis on graduates of Corinthian Colleges, Inc. institutions and guaranteed at least 10% relief to those graduates regardless of income.

The new DoE decision announced last week does away with that old formula and instead grants full student debt relief to anyone already approved for relief under the old methodology. Essentially, if a student was supposed to get any kind of relief at all — even if the student was in the group receiving 10% of relief — they will see all federal student loans used to pay for colleges that defrauded them wiped away. 

This change applies to students and graduates applying for Borrower Defense, a program for borrowers who attended a program they believe misled them or engaged in other misconduct. The program only cancels federal Direct Loans, which mean a borrower will retain the debt from private student loans, Federal Family Education Loan program loans or Federal Perkins Loan Program loans.

In all, the Department of Education estimates this will cancel approximate $1 billion in student loan debt held by about 72,000 borrowers., which compiles a number of statistics regarding higher education, estimates the current nationwide student debt total is $1.71 trillion based on DoE statistics. They estimate $1.56 trillion of that is in federal student loans, which are the loans that are the easiest for the government to take direct action on. EducationData estimates there is a total of 43.2 million Americans with student loan debt and 42.9 million with federal student loan debt.

To put all those numbers in perspective, the change made by the DoE will cancel about 0.05% of the total student loan debt nationwide for about 0.16% of total borrowers. So the pie chart from the viral tweet does fairly represent the total dent this will make in nationwide student loan debt.

Unsurprisingly given the priority the Biden administration and Congressional Democrats have placed on student debt relief, the Department of Education claimed they will do more down the line. “This is the Department’s first step in addressing borrower defense claims as well as the underlying regulations. The Department will be pursuing additional actions, including re-regulation, in the future,” the DoE said.

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