by lending to students, thanks to already-existing forgiveness programs and the pandemic-era pause on payments. Still, the money to pay for the loans in the first place comes from the U.S. Treasury, which sells bonds to investors. Those Treasury bills and bonds don’t just pay for student loans — they go toward funding every aspect of the government, like military programs or highways or food-assistance programs.
But it turns out that hundreds of thousands of those borrowers shouldn’t have even been paying anyway — meaning that they were effectively funding a program that they shouldn’t have been caught up in. The newest batch of forgiven loans are ones that have been around the longest — those that are more than 20 or 25 years, and, according to the Department of Education, are only still active because of “historical failures in the administration of the federal student-loan program.
It’s not clear why this happened, or how it could have grown as large as it did. It amounts to about 2 percent of the 44 million student borrowers — a small but meaningful percentage, especially when you consider that the profile of these borrowers are those who have struggled to pay off their loans during the last few decades.
Taken as part of a larger picture, the Biden administration’s plan to eliminate student debt is now one of the biggest initiatives in the federal government. According to the Education Department, $45 billion in federal loans have been canceled for public servants. $22 billion for those who went to so-called scam schools has been forgiven. Those with permanent disabilities had $5 billion of their loans cut.