Federal student loan borrowers have had quite a year.

If the story of their 2023 could be written by the ghost of Herman Melville, he'd have plunged borrowers into the frigid depths, bound to a white whale big enough to embody the disappointment of millions of Americans who spent the first half of the year hoping to be free of their student loans, and the second half realizing they and their debts were still intertwined.

Whale analogies aside, it was a year for the ages. A year that will be studied for decades, as the inflection point between one unprecedented era – a pandemic payment pause punctuated by the U.S. Supreme Court's scuttling of President Biden's debt relief promises – and another – the rollout of sweeping new repayment policies just as millions of muddled borrowers return to a system hobbled by partisan bickering and budget cuts.

What to make of it all? As a correspondent who's spent years covering the federal student loan system, my editors asked me to reflect on the year and share a few thoughts. I have three.

1. Student loan forgiveness is neither dead nor alive. It's a slow, shambling zombie!

Many, perhaps most borrowers will tell you that 2023 was the year the idea of "student loan forgiveness" died atop the mahogany bench of the Supreme Court.

But it didn't. Not entirely. To understand why, we need to unpack "student loan forgiveness," because those three words have been so overused by Republicans and Democrats alike, they've come to mean everything and nothing at all.

In the largest sense, "student loan forgiveness" became a catch-all name for President Biden's August 2022 proposal to erase up to $10,000 in federal student loan debt for most borrowers and up to $20,000 for Pell Grant recipients. And yes, that plan is dead. In a 6-3 decision, the Supreme Court ruled in June 2023 that the Biden administration did not have the authority under a 20 year-old federal law to forgive hundreds of billions of dollars of student debt.

But that same day, Biden announced "a new path consistent with today's ruling to provide student debt relief to as many borrowers as possible as quickly as possible." What does that mean? Many borrowers simply shrugged, assuming Biden was trying to save face.

He was, and he wasn't. The U.S. Education Department is now working slowly, using a different law (the Higher Education Act) and a bureaucratic process known as negotiated rulemaking, to explore what kind of legal authority the education secretary does have to cancel student debts.

This is a long, muddy process, and whatever debt relief emerges from it, likely in 2024, will feel smaller than Biden's first, expansive proposal. But something will likely survive, at least until it faces a fresh round of conservative legal challenges.

Here's the thing: "Student loan forgiveness" isn't just that one, big Biden plan and its bureaucratic afterlife. One of the ironies of Biden's go-big-or-go-home play is that its failure has eclipsed the smaller, very real debt relief his Education Department has provided.

For example: On July 14, an otherwise quiet, summer Friday two weeks after the Supreme Court declared Biden's plan unconstitutional, the Biden administration announced it was nevertheless erasing $39 billion of debt for 804,000 borrowers.

This version of debt cancellation was the result of a complex "account adjustment" the Education Department promised after advocates and an NPR investigation revealed widespread mistakes and mismanagement of income-driven repayment (IDR) plans, including millions of borrowers spending long periods of time in forbearance. The adjustment gave borrowers credit for that time toward IDR's promise of loan forgiveness. And for those 804,000 borrowers – and nearly another 100,000 since – it was enough to qualify them for debt cancellation.

Did any of that make sense? No? You're not alone.

Still, when you add those results to changes the Biden administration previously made to other forgiveness programs, including for public workers and borrowers with severe disabilities, the Biden Education Department says it has approved nearly $132 billion in debt relief for more than 3.6 million borrowers. Whether you see that relief as a kindness to the deserving or a waste of taxpayer dollars, it is, objectively, an enormous amount of "student loan forgiveness."

2. The SAVE program is a new, gentler system for paying back student loans

Now to the big changes for the tens of millions of borrowers who did not get debt relief.

In August, just days before interest resumed accruing on federal loans, the Biden administration opened a new repayment plan to borrowers. It's called the Saving on a Valuable Education program, or SAVE, and its terms are more generous than anything that's come before.

The plan exempts more of a borrower's income from the monthly payment math than previous plans, and, under SAVE, interest no longer accumulates beyond what a borrower can afford to pay each month. Under previous plans, borrowers with low or $0 payments — too low to cover their monthly interest — saw that interest explode. With SAVE, that stops.

What's more, the plan promises multiple windows for loan forgiveness, starting after just 10 years for borrowers with $12,000 or less in loan debts – which means many borrowers will end up paying far less over time on SAVE than they would have on old plans. In fact, the department itself acknowledges that, under a previous plan for low-income borrowers, borrowers repaid, on average, $10,956 for every $10,000 they borrowed. Under SAVE, they will pay back just $6,121.

That's why Republicans in Congress have been fighting to stop SAVE.

"America's student loan system is broken," said the Republican chair of the House Education Committee, Virginia Foxx of North Carolina, "and this reckless, inflationary, and illegal expansion of executive authority will all but ensure it's doomed beyond repair."

President Biden has said, even if Congress does send him a bill to kill SAVE, which the Senate seems unwilling to do, he'll veto it.

I teamed up with Planet Money's Kenny Malone for a deep-dive episode into SAVE and what it will mean for borrowers in the long-run. You can listen to it here.

And SAVE isn't the only big repayment change the Biden administration rolled out. There's also a new program, called Fresh Start, to help the nearly 7 million federal student loan borrowers who are in the teeth of default. Fresh Start makes it easier for borrowers to improve their credit and gives them immediate access to the SAVE repayment plan – for many borrowers, a welcome alternative to the old days of forced collections and wage garnishment.

These are seismic changes to the system. They may not result in immediate loan forgiveness, but they are absolutely meant to make for a kinder, gentler repayment system.

3. Big changes ... with no extra money to pull them off

I began the year, back in January, with a story meant to sound an alarm: The federal agency overseeing the return to repayment, and responsible for implementing these seismic changes in policy, was facing the prospect of having to do it all with no extra funding.

Imagine: Exponentially more work... but not one extra dollar to do it.

Well, here we are, a year later, and the crisis has arrived. The office of Federal Student Aid (FSA) has already had to tell loan servicers to scale back borrower support and may well do so again, if Congress doesn't agree to a funding solution soon.

What has this budget crisis meant for borrowers? Last January, with no one yet required to make student loan payments, the risk to the system was abstract. Today, it's crushing.

In September, even before many borrowers began repayment, NPR reported long wait times for borrowers calling their servicers and many giving up before they could get their questions answered. By late October, even the Education Department was bemoaning servicer mistakes, long call wait times and more than half of borrowers hanging up before getting through.

More money would help in 2024. The problem, though, isn't just money, and neither is the fix.

Part of the challenge FSA and its servicers face isn't just helping 28 million borrowers return to repayment; it's helping them return to a system that has also changed dramatically this year.

Some in the Biden administration complain that servicers are making a mess of the changes and hurting borrowers. But sources with the servicers, as well as a few within the administration itself, complain the Education Department is asking them to do the impossible, launching servicers from a catapult and telling them to build an airplane in mid-air, then shaming them when they fall.

The department recently announced, of the 22 million borrowers with bills due in October, 60% made a payment by mid-November. Biden administration sources see these numbers as a win, knowing they could have been much worse. But no one's throwing a party, considering more than 8 million borrowers did not make a payment on-time and FSA's running out of money.

Talk of funding and finger-pointing aside, it's worth noting that the fight for broad debt relief (and now the negotiated rulemaking) cost the Education Department considerable time, energy and political capital – resources that could not then be spent smoothing the return to repayment.

Defenders of Biden's debt relief plan argue it was a critical fight, even if it didn't end as they'd hoped. Though it is also a reminder that, in government, pushing one new idea – especially an idea as big as debt relief – inevitably takes time and attention away from something else. And the Education Department has a lot of something else on its hands.

Case in point: Congress charged the department with overhauling the Free Application for Federal Student Aid. The form is usually released in October, in time for students to understand their federal financial aid options before getting acceptance letters from colleges. But this new, overhauled FAFSA has been delayed until December. That's bad news for families. What's more, in the rush to finish the redesign, a mistake has been made that could mean many students and their families qualify for less federal student aid.

There's also this bill, passed by Congress and signed into law by President Biden in late 2022, that finally allows former spouses to separate loans they had consolidated while married. The move was a big win for many women who left abusive relationships only to find themselves still tied to their abusers' student loan debts. While the law achieved the impossible – squeezing through Congress' partisan eye of the needle – it has stalled in the queue of big ideas the Education Department is trying to implement with finite staff and a grinding budget crisis.

As the Education Department told NPR in a recent statement, "We simply have not received the resources to implement this split as soon as we would have wanted."

The question for 2024 is whether that will change, and whether the department can muster the people, time and money required to turn its many high-stakes promises (from SAVE to Fresh Start to FAFSA) into functioning, concrete programs.

Edited by: Nicole Cohen
Visual design and development by: LA Johnson

Copyright 2023 NPR. To see more, visit https://www.npr.org.

Tags: Series: The Student Loan Restart