President Joe Biden is set to unveil a new mass student loan forgiveness plan at a speech in Wisconsin. The plan has been in development for nearly a year, with Biden directing the Education Department to develop a new program after his initial plan was struck down by the Supreme Court last summer. The department has completed key steps in developing regulations for the new initiative, which is being crafted under a different legal authority in the hopes of putting it on stronger legal footing.
The new student loan forgiveness plan differs significantly from Biden’s initial plan, which aimed to eliminate $10,000 in federal student loan debt for most borrowers. The new initiative will target relief to specific groups of borrowers, including those with loans taken out more than 20 or 25 years ago, individuals who have experienced substantial balance growth due to interest accrual over time, former students of predatory schools, borrowers eligible for existing forgiveness programs but did not apply, and those facing financial hardship.
Unlike the first plan, which had specific income requirements, the new program could potentially allow for cancellation of the borrower’s full loan balance in some cases. The Education Department aims to implement much of the relief automatically using available data, but hardship-based forgiveness may require an application. It is estimated that over 20 million borrowers could benefit from the new plan, which is separate from other debt relief initiatives implemented by the Biden administration.
In addition to the new student loan forgiveness plan, the Education Department under the Biden administration has made various fixes to the Public Service Loan Forgiveness program, income-driven repayment plans, Total and Permanent Disability discharge program, and other debt relief initiatives for students impacted by certain school practices. These actions have resulted in over $143 billion in student loan forgiveness for more than 4 million borrowers, marking significant progress in addressing the student loan debt crisis.
While the new student loan forgiveness plan is not yet open for applications, the Education Department is expected to publish final regulations in the coming weeks, followed by a public comment period. The plan could potentially be implemented by this fall. However, legal challenges are anticipated, as the new initiative utilizes a different legal authority from Biden’s first plan. While the Higher Education Act allows for student debt cancellation in certain circumstances, the outcome of potential legal battles remains uncertain.
Overall, the new student loan forgiveness plan announced by President Biden aims to provide targeted relief to specific groups of borrowers facing financial hardship or other challenges with their loans. Despite potential legal hurdles, the administration is moving forward with the initiative, which could benefit millions of Americans struggling with student loan debt. As the program progresses through the regulatory process, borrowers are advised to stay informed about updates and eligibility requirements to take advantage of potential relief in the future.
