16.2 Million Borrowers Approved for Estimated $210 Billion in Student Debt Relief, With Another 9 Million Potentially Eligible for $117 Billion of Forgiveness

Millions of Americans have been holding their breath since August, waiting to see if President Joe Biden’s plan to cancel billions of dollars in student loan debt will come to fruition. But if anything, times are getting tenser: The matter landed in the Supreme Court in February, and many expect the conservative-majority panel to strike down Biden’s executive action.

What, exactly, is at stake here? LendingTree analyzed data from the U.S. Department of Education to estimate that 16.2 million borrowers have been approved for student debt relief under the provisional plan, totaling an estimated debt forgiveness of $210 billion. Another 9 million borrowers who’ve applied or been deemed automatically eligible but haven’t been formally approved could add another $117 billion to that massive pot — should the action go into effect.

(These figures are rough estimates resulting from calculations and assumptions based on the available data. See the methodology for a full breakdown of how we arrived at these numbers.)

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Key findings

• 16.2 million borrowers have already been approved for student loan forgiveness in the 50 states and the District of Columbia under President Joe Biden’s plan to forgive up to $10,000 or up to $20,000 in student debt for those who meet the criteria. An additional 9 million borrowers have applied or been deemed automatically eligible but haven’t yet been approved. Broken down another way, 63.7% of direct loan debtors have applied or been deemed automatically eligible — including 40.9% who’ve already been approved.
• We estimate that amounts to $210 billion in forgiveness for those already approved, with another $117 billion potentially forgivable for those who’ve applied or been deemed automatically eligible but haven’t yet been approved. We based our estimate on a synthesis of various data series and points provided by the Department of Education. We estimate 14.9% of the entire direct loan portfolio has already been approved for forgiveness.
• Rhode Island boasts the highest share of existing federal loan debtors who’ve already been approved — 62,900 borrowers, or 45.6% of borrowers. Illinois (43.7%) and Vermont (43.6%) follow. These states are also among the top four with the highest rate of borrowers identified as eligible or are waiting for approval. Wyoming (34.0%), New Mexico (36.2%) and Montana (37.1%) have the smallest share of debtors who’ve already been approved.
• Wisconsin (18.0%) has the largest share of existing debt approved for forgiveness, according to our estimates. Iowa (17.5%) and South Dakota (17.3%) follow closely. At the bottom are the District of Columbia (9.8%), Maryland (12.3%), and Georgia and Alaska (both 13.1%).
• 40.8% of borrowers either deemed eligible or who’ve submitted applications haven’t yet been approved in Wyoming – the largest share in the U.S. That means an additional $160 million of forgiveness is potentially available in the state. North Dakota (39.6%, or $260 million) and Montana (39.0%, or $350 million) follow.

How LendingTree researchers calculated these estimates

U.S. Department of Education data provides the number of people approved for Biden’s student loan forgiveness plan in each state. It also provides the number of people in each state who applied or were deemed automatically eligible but aren’t yet approved.

As part of the process, our researchers analyzed College Scorecard microdata to estimate the number of student debtors in each state who were or weren’t Pell recipients.

The resulting debt figures are subject to additional caveats — not everyone eligible for these amounts of debt relief has that much debt remaining, for example, although we account for that in our calculations. In addition, the Department of Education data shows the states in which debtors live, while the College Scorecard data shows the states in which they studied; these two locations aren’t necessarily the same.

As a reminder, you can find a detailed list of the assumptions implicit in our calculations in the methodology.

Borrowers approved for estimated $210 billion in student debt relief, with another $117 billion on table

Across the U.S., 16.2 million borrowers are already approved under Biden’s plan for student loan relief. This amounts to an estimated $210 billion in student debt that could be forgiven, according to LendingTree projections. Another 9 million borrowers have applied or been deemed automatically eligible but not formally approved, which could equate to another $117 billion in potential debt relief. In total, that equals $327 billion.

If it goes through, Biden’s plan will hugely impact a broad demographic: Federally held student loans represent “the vast majority of all U.S. student debt,” says Michael Kitchen, LendingTree student loan expert. Even the lower tier of relief — $10,000 — could wipe out federal student debt for a third of borrowers.

Still, not all hope is lost. “The administration used the 2003 Heroes (Higher Education Relief Opportunities For Students) Act to justify the forgiveness program,” says Kitchen, “a law stating, among other things, that in times of national emergency, the education secretary can ‘waive or modify’ federal student aid to protect borrowers from the disaster’s economic fallout.”

The COVID-19 pandemic arguably represents such an emergency, but only time will tell how the Supreme Court will deliberate.

Here’s a breakdown of the totals potentially eligible for forgiveness:

Number of borrowers and estimated forgiveness amounts based on scenarios

Source: LendingTree analysis of various data points provided by the Department of Education.

Rhode Island has highest share of existing federal direct loan debtors who’ve already been approved

Specifics vary in each state and the District of Columbia regarding the percentage of direct loan borrowers who’ve been approved or who’ve applied or are automatically eligible but not yet approved. Ironically, the state smallest in physical size is leading the charge when it comes to relief-approved federal student loan debtors.

About half (45.6%) of Rhode Island’s borrowers — 62,900 people — are already approved for student loan relief. Another 32,300 could be approved, representing a total of 69.1% of the state’s direct loan borrowers.

Illinois and Vermont have the next-highest percentage of already-approved borrowers at 43.7% and 43.6%, respectively. In Vermont, another 19,700 could be approved, representing 70.1% of the state’s direct loan borrowers when including those already approved — highest across the U.S.

States with the highest percentage of borrowers who’ve applied or been deemed automatically eligible (including those already approved)

Source: LendingTree analysis of various data points provided by the Department of Education.

Wisconsin has largest share of existing debt approved for forgiveness

With 18.0% of existing student loan debt already approved for forgiveness, Wisconsin has the highest percentage of debtors who are really crossing their fingers that Biden’s plan goes through. If it does, Wisconsin borrowers will wave goodbye to $3.91 billion in student loan debt.

Iowa and South Dakota are next, with 17.5% and 17.3% of their direct loan debt relief debt already approved to be forgiven, respectively. Iowa stands to see $2.19 billion in debt eradicated, versus $590 million in South Dakota.

The same three states (in a different order) top the charts when looking at states with the highest percentage of debt from borrowers who’ve already applied or been deemed automatically eligible for relief but haven’t yet been approved. All told, if the eligible 27.7% of its direct loan debt were to be forgiven, Wisconsin borrowers would owe $6.01 billion less in student loans.

Share of debt from borrowers who’ve applied or been deemed automatically eligible (including those already approved)

What to do if Supreme Court strikes down Biden’s forgiveness plan

Even if the much-hoped-for student debt relief plan fails, there are ways to get out from under the crushing thumb of student debt. And with the current repayment pause set to end in June (with payments resuming 60 days later) should the plan fall through, the time to start taking action is now.

• Look into income-driven repayment plans. According to Kitchen, more than 90% of all U.S. student debt is federal — and federal loans are the ones that qualify for income-driven repayment plans. “These plans set your monthly payment at a (hopefully) affordable percentage of your disposable income,” Kitchen explains. “After a given number of years, whatever you still haven’t paid off is forgiven.”
• Consider other ways to get loan forgiveness. Federal loan borrowers can also look into special forgiveness options, Kitchen says. Public Service Loan Forgiveness, for example, “can wipe away your remaining debt after just 10 years, so long as you work for a government agency or nonprofit.” If you’re a teacher, you should look into the Teacher Loan Forgiveness program. In addition, your state may have other forgiveness programs specifically geared toward teachers, health care workers and others.
• If you have private student loans, reach out to your lender. It may be able to work with you to make your bill more manageable. In some cases, you may be eligible for a temporary forbearance.
• If you have multiple lenders, consider consolidating your debt. Taking out more debt to alleviate debt in the long term may sound counterintuitive, but it can be helpful. Along with making your payments easier to track, consolidating your debt may lower your monthly bill or overall interest rate.

Methodology

LendingTree researchers used various data from the Department of Education, including loan forgiveness applications and approvals, outstanding direct loan portfolios by state, outstanding direct loan portfolios by debt size and institution-level loan disbursement data from College Scorecard microdata.

To create this state-by-state estimate, we made the following assumptions:

• Graduate PLUS borrowers also have Stafford loans.
• The remainder of Parent PLUS loans and Stafford loan portfolios minus the entire direct loan portfolio represents the number of Parent PLUS borrowers who don’t carry their own Stafford loans.
• The proportion of student debtors residing in each state who received Pell grants is the same as the proportion of people who graduated with student debt from institutions in the same state over the most recent 10-year period for which data was available.
• The proportion of Parent PLUS debtors residing in each state who received Pell grants is the same as the proportion of people on whose behalf parents borrowed graduated from institutions in the same state over the six-year period for which data was available.
• The proportion of eligible debtors in each state who owe less than $5,000, less than $10,000 and less than $20,000 is the same as the national proportion, as is the average balance for these debtors, regardless of Pell recipient status.