PROJECT OVERVIEW
Administrative Burdens in Higher Education Loan Forgiveness
Highlights
Student debt has grown to over $1.7 trillion, making it the largest share of debt held by Americans, and a barrier to a higher quality of life for many.
To address the growing crisis, presidential administrations have implemented various programs
intended to provide relief to borrowers. But many of these programs came with administrative
burdens that hindered access to relief.
This report examines the rise of administrative burdens and steps taken by the
Department to address them.
Overview
Almost 47 million Americans, roughly 17 percent of all adults, hold student loan debt amounting to $1.7 trillion. As of 2022, “approximately 7.5 million Americans are in default on their federal student loans”' (Sattelmeyer, 2022). Borrowers can be subject to collection fees, drops in credit scores, wage garnishment, loss of professional licensures, and loss of access to other federal benefits, exacerbating their financial instability.
The United States government began issuing direct student loans in 1958, switched to guaranteeing privately issued loans in 1965, then switched back to making direct loans in 2010. As student loan debt rose precipitously, a series of laws, regulations, and other administrative actions taken since 1993 have attempted to provide relief to borrowers and curb the growing debts.
Student loan relief programs have featured administrative burdens that limit borrowers’ abilities to understand and participate in these programs. For instance, borrowers faced substantial learning, compliance, and psychological costs when trying to access Public Service Loan Forgiveness (PSLF) benefits, which provide full loan forgiveness after 120 qualifying payments and ten years of public service work. By May 2019, the Department of Education denied 99 percent of applications for loan forgiveness under the PSLF.
Student loan debt has affected Black borrowers disproportionately, who are three times as likely as white students to default on their loans, and since the year 2000, have defaulted at a rate of nearly 40 percent. The original student loan program was created as a means of increasing access to higher education and improving social mobility, but instead has stymied those populations’ ability to accumulate wealth (Mitchell, 2021).
Over the last decade, the Department of Education has consistently implemented burden-reduction efforts in its student loan reduction/management programs. These efforts occurred across presidential administrations, but accelerated and became more salient under the Biden Administration. For instance, the U.S. Digital Service ensured the form by which borrowers applied to have their loans forgiven during the Biden administration was simple and easy to navigate. Yet, both political and service delivery barriers have slowed or prevented the Department of Education from implementing burden-reducing strategies.
