The Biden administration has announced a new plan that would provide relief to various groups of borrowers struggling with student loan debt. The plan includes canceling up to $20,000 of interest for low- and middle-income borrowers enrolled in income-driven repayment plans. Additionally, borrowers who are eligible for loan forgiveness under existing programs like Public Service Loan Forgiveness or the administration’s new SAVE program would have their debts automatically canceled. Those who have been repaying their loans for more than 20 years for undergraduate debt and 25 years for graduate debt would also have their debts canceled.
Furthermore, borrowers who attended programs or colleges that lost federal funding due to fraud or misconduct, as well as those who attended institutions with poor job prospects after graduation, would be eligible for debt relief. Additionally, borrowers facing financial hardship due to medical or child care costs would also be considered for relief. The administration is considering automatic forgiveness for those at risk of defaulting, although the exact criteria for identifying these borrowers is still being determined.
This plan differs from previous efforts by the Biden administration, which initially attempted to provide $400 billion in debt relief for 40 million borrowers through the HEROES Act. However, the Supreme Court blocked this move, citing that the president had exceeded his authority. The new plan targets specific groups of borrowers under the Higher Education Act, in order to ensure compliance with legal boundaries set by the Supreme Court. The administration has worked with attorneys to design the program in a way that aligns with the principles outlined in the court’s ruling.
Overall, the new plan aims to provide relief for nearly 30 million borrowers by forgiving some or all of their student loan debt. By focusing on targeted groups of borrowers, the administration believes it can navigate the legal constraints and provide much-needed assistance to those struggling with student loan repayment. The plan offers a one-time interest forgiveness benefit, automatic cancellation for eligible borrowers, and relief for those facing financial hardship or who attended institutions with poor outcomes. The administration’s goal is to offer meaningful support to borrowers while staying within legal boundaries to ensure the program’s effectiveness and longevity.
