Biden Admin Loosened Restrictions on Student Loan Program After Unions’ ‘Utterly Self-Serving Request,’ Watchdog Says

The Department of Education under President Joe Biden loosened requirements for a student loan program specifically for public servants and nonprofit employees a few months after unions that stood to benefit from the change sent a letter to then-Education Secretary Miguel Cardona.

The watchdog Protect the Public’s Trust, which obtained the letter via a Freedom of Information request, faulted the unions for self-dealing when they demanded the Biden administration cancel the student loan debt of all public sector and nonprofit workers who completed 10 or more years of service, leaving taxpayers to pay off the balances. The revelation comes as the Department of Education under President Donald Trump is revising the program to root out alleged abuses.

The unions defended their move as keeping in line with the goal of the legislation that created the loan program. Either way, the letter arguably demonstrates unions’ large degree of influence in the Biden administration.

“These unions were lobbying for a direct financial benefit for their members at the expense of the American public,” Michael Chamberlain, director of Protect the Public’s Trust, told The Daily Signal in a statement Monday.

“By adopting the position the unions advocated for in this letter and loosening the restrictions on the PSLF [Public Service Loan Forgiveness program], which it appears they eventually did, the Biden administration’s Department of Education transferred the loan balances of millions of members of these unions to taxpayers,” he added. “This was an utterly self-serving request couched in the language of altruism and fairness.”

“When the big school unions created the U.S. Department of Education, it wasn’t because they didn’t expect something in return,” Betsy DeVos, who led the department in President Donald Trump’s first term, told The Daily Signal. “The payoffs will continue until the department is closed.”

The National Education Association; the American Federation of Government Employees; the American Federation of State, County, and Municipal Employees; the Service Employees International Union; the union representing employees at the Consumer Financial Protection Bureau; and others signed the letter on April 1, 2021.

“The undersigned unions, representing more than 10 million public service workers, urge you to take immediate action to cancel the student loan debt of all public sector workers who have completed a decade or more of service,” the letter stated.

The letter cited the College Cost Reduction and Access Act of 2007, which established a program to cancel remaining student loans for certain workers—government employees; members of the military; those in public health; and those who work for nonprofits under Section 501(c)(3) of the tax code—who had been paying their loans for 10 years.

The letter claimed the Public Service Loan Forgiveness program should have covered more government and nonprofit employees and claimed that DeVos had mismanaged it. Between 2017, when the first public service workers became eligible for the program, and 2021, only 5,500 borrowers had their loans erased.

In October 2021, during the Biden administration, Cardona relaxed the rules for program, moving more than 550,000 borrowers closer to forgiveness, the Associated Press reported.

Trump signed an executive order in March, accusing the previous administration of abusing the loan forgiveness program “to pay off loans for employees still years away from the statutorily required number of payments.” He also claimed the department “misdirected tax dollars into activist organizations that not only fail to serve the public interest but actually harm our national security and American values.”

Finally, he claimed the program “creates perverse incentives that can increase the cost of tuition, can load students in low-need majors with unsustainable debt, and may push students into organizations that hide under the umbrella of a nonprofit designation and degrade our national interest.”

Trump then directed the program to exclude nonprofit organizations that he claimed break the law by promoting violations of federal immigration law, supporting terrorism, backing experimental medical interventions on children in the name of “gender-affirming care,” aiding and abetting illegal discrimination, and more.

On Monday, the Department of Education announced its intent to establish a rulemaking committee to prepare regulations for federal student aid programs, including the Public Service Loan Forgiveness program. It is asking the public to nominate negotiators for the process.

“President Trump’s executive order will restore the PSLF program to its statutory basis and not allow PSLF to fund anti-American activists,” a department spokeswoman told The Daily Signal in a statement Monday. “The executive order is narrow in its purpose to ensure certain nonprofits do not inappropriately qualify for PSLF but does not direct other changes to the program. The department is reviewing the executive order and will ensure the program is managed effectively for those it is intended to serve.”

Supporters of the relaxed rules claim that erasing student debt helps promote education and assists the less fortunate. Critics argue that “forgiving” student loans props up bloated left-leaning universities while taking money from taxpayers to subsidize those fortunate enough to go to college.

One of the unions that sent the letter defended its request to Cardona as being in line with the law’s original purpose.

“Congress passed and President [George W.] Bush signed into law Public Service Loan Forgiveness with the explicit purpose of encouraging Americans to enter careers in public service, including in the federal government,” a representative for union representing the Consumer Financial Protection Bureau told The Daily Signal. “There is no hidden agenda.”

Hidden or not, the unions’ letter confirms the basic premise of my book, “The Woketopus: The Dark Money Cabal Manipulating the Federal Government.” My book traces how a system of left-leaning nonprofits—including many of the unions that signed the letter—sent staff and ideas into the Biden administration, shaping federal policy in a direction critics would describe as “woke.”

Cardona did not respond to The Daily Signal’s request for comment by publication time.

The National Education Association; the American Federation of Government Employees; the American Federation of State, County, and Municipal Employees; and the Service Employees International Union did not respond to The Daily Signal’s request for comment.

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