5 groups of borrowers who could still receive student loan forgiveness

President Joe Biden is joined by Education Secretary Miguel Cardona as he announces new measures to protect borrowers after the Supreme Court rejected his student loan forgiveness plan in the Roosevelt Room at the White House on June 30, 2023 in Washington, DC.

Chip Somodevilla | Getty

Nearly 40 million Americans were set to benefit from President Joe Biden’s original student loan forgiveness plan Supreme Court ultimately blocked over the summer.

Although the Biden administration is now trying to forgive education debt in other ways, experts warn that borrowers should temper their expectations. Given the legal challenges involved in passing comprehensive debt relief, they expect the president’s Plan B for debt relief will likely have a narrower reach.

“A much smaller number of borrowers will be eligible,” said higher education expert Mark Kantrowitz.

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In fact, Kantrowitz estimates that fewer than 10% of federal student loan borrowers will qualify for this round. Under the president’s first plan, introduced in August 2022, more than 90% of borrowers would have had their balances paid off or reduced. The plan excluded only those who earned more than $125,000 as individuals or married couples and earned more than $250,000.

The U.S. Department of Education did not immediately respond to CNBC’s request for comment.

Consumer advocates have criticized the Biden administration for scaling back its plans, pressuring him to take on his legal opponents and still try to score a major breakthrough on debt relief. On the campaign trail, Biden promised to cancel at least $10,000 of student debt per person.

“Anything other than what Biden has promised will be seen as a disappointment, even a betrayal,” said Astra Taylor, co-founder of the Debt Collective, a union for debtors, in an earlier interview with CNBC.

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For now, the government appears to be focused on providing relief to five specific groups of borrowers, according to a recent paper from the U.S. Department of Education.

1. Borrowers whose balance is greater than what they originally borrowed

The Education Department says it will focus on borrowers whose balances have grown only because of the accumulation of unpaid interest.

CNBC wrote about people seeing their debt double or even triple because they had to forgive their debts or were charged amounts that did not even fully cover their interest.

2. Those who have been paying for decades

The Education Department is considering relief for borrowers who “started repayment many years ago.”

While it’s unclear how many people fit into this category, about 2.7 million borrowers ages 62 and older currently owe about $115 billion in student debt, Kantrowitz said.

3. Individuals who have participated in programs of questionable value

Borrowers who participated in programs that “did not provide minimum financial value” are another group being considered for relief.

Under Biden, the Education Department has already prioritized students at for-profit colleges, which have come under fire for misleading borrowers about their programs. It has canceled about $22 billion in student debt for these people.

4. Borrowers who are eligible for relief but have not applied

5. Debtors in financial distress

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