# Student Loans The federal government holds more than **$1.7 trillion** in student loans owed by about **42.3 million** people (Federal Student Aid, June 2026). Since 2022 the system has been one of the most contested arenas in American politics. A president tried to cancel debt by executive action and lost at the Supreme Court. His successor dismantled the main relief plan and resumed collections. Congress then rebuilt repayment from scratch, while the administration began moving the loans out of the Education Department. ## The numbers - **Federal portfolio:** more than $1.7 trillion; 42.3 million borrowers, down from a peak of 43.8 million in December 2022. - **All student debt (New York Fed, Q2 2026):** $1.65 trillion, with **10.6%** of balances 90 or more days delinquent, up from 10.3% the previous quarter. - **In default:** about 7.8 million borrowers owing about $179 billion at the end of 2025 (Congressional Research Service). ## How we got here **The forgiveness fight (2022–2023).** [[Joe Biden]]'s plan to cancel up to $20,000 per borrower, roughly $430 billion by CBO's estimate, was struck down in **[[Biden v. Nebraska]]** on June 30, 2023. The vote was 6–3, with Chief Justice [[John Roberts]] writing that the HEROES Act did not authorize it. The administration then used existing programs instead. By January 2025 it had approved about **$188.8 billion** in targeted forgiveness for 5.3 million borrowers, including $78.5 billion through Public Service Loan Forgiveness (below). **The end of SAVE (2024–2026).** - **Blocked:** Biden's income-driven SAVE plan was blocked by the 8th Circuit in August 2024. The Supreme Court declined to revive it on Aug. 28, 2024, leaving millions of borrowers in forbearance. Interest resumed on Aug. 1, 2025. - **Settled:** in December 2025 the Trump administration announced a settlement with Missouri to end the plan. - **Ended in court:** after a detour through the courts, a federal judge entered judgment vacating the SAVE rule on **March 10, 2026**. - **Borrowers moved:** the Education Department began moving more than 7 million enrolled borrowers into other plans. Under Secretary Nicholas Kent: "The days of unlawful loan forgiveness are behind us." **Collections.** - **Restarted:** involuntary collections on defaulted loans resumed **May 5, 2025**, when Treasury began seizing tax refunds and federal payments. - **Paused:** wage garnishment was announced for January 2026. On Jan. 16, 2026 the department paused all involuntary collections, both garnishment and offsets, to implement the new law, and as of late October 2026 no restart date had been announced. ## The 2025 law rebuilt repayment The [[Big Beautiful Bill]] (signed July 4, 2025) rewrote the system. Most changes took effect **July 1, 2026**: - **Repayment Assistance Plan (RAP):** payments of 1–10% of income, minimum $10 a month, minus $50 per dependent. Unpaid interest is waived, and any balance left after 30 years is cancelled. Nearly 46,000 borrowers applied on the first day. - **Grad PLUS ends** for new graduate borrowers. - **New caps:** $100,000 total for graduate students and $200,000 for professional students. Parent PLUS is capped at $65,000 per student. - **Older income-driven plans** (ICR, PAYE and the remnants of SAVE) close by July 1, 2028. ## Taking the loans out of the Education Department - **The plan:** after ordering the [[Department of Education]] dismantled, [[Donald Trump]] said in March 2025 that the Small Business Administration would "handle all of the student loan portfolio." - **What actually happened:** Education and the [[Department of the Treasury]] signed an agreement on **March 19, 2026** that moves defaulted-loan collection to Treasury first, then other loans "to the extent practicable and permitted by law." Secretary [[Linda McMahon]] said the department "has failed to effectively manage and deliver these critical programs." - **The layoffs:** the Supreme Court let the department's mass layoffs proceed in *McMahon v. New York* (July 14, 2025). Justice Sotomayor wrote in dissent that "the President must take care that the laws are faithfully executed, not set out to dismantle them." ## Public Service Loan Forgiveness An October 2025 rule would have barred employers with a "substantial illegal purpose" from the program. The department's examples included "aiding and abetting illegal immigration" and gender-transition care for minors. Twenty-two states, DC, cities, unions and nonprofits sued. - **Struck down:** a federal judge in Massachusetts vacated the rule on June 30, 2026 as arbitrary and a First Amendment violation, and a second federal court also struck it down. - **Dropped:** on Oct. 21, 2026 the administration abandoned both appeals. ## Why it's on the map Student debt runs through three stories this wiki tracks: - **The courts and the presidency:** forgiveness was struck down under the [[Major Questions Doctrine]] logic of *Biden v. Nebraska*, while the same Court let the Education Department be gutted on its emergency docket. - **Using benefits as leverage against disfavored employers:** the PSLF rule. - **The [[K-Shaped Economy]]:** a tenth of student-loan balances seriously delinquent at the same moment the top 1%'s share of wealth hit a record. The debt also sits inside the 2026 [[Affordability]] argument. ## See also - [[Department of Education]] · [[Linda McMahon]] · [[Big Beautiful Bill]] - [[Biden v. Nebraska]] · [[Major Questions Doctrine]] · [[Joe Biden]] - [[K-Shaped Economy]] · [[Affordability]] · [[State of the US Economy]]