President Joe Biden’s latest plan for student loan cancellation is moving forward as a proposed regulation, offering him a chance to fulfill a campaign promise. The Education Department filed paperwork for a new regulation that would cancel or reduce loans for more than 25 million Americans. The plan highlights five categories of people who would be eligible for help, with four covered in the new proposal, and the fifth to be addressed in a separate filing. The plan seeks to provide relief to borrowers burdened by student loan debt through various avenues of forgiveness.
One category of forgiveness would eliminate up to $20,000 in interest for borrowers who owe more than their original loan amount due to accumulating interest. Additionally, borrowers with annual incomes below $120,000 and enrolled in income-driven repayment plans would have all their interest erased with no maximum limit. Another category targets those who have been paying back undergraduate loans for at least 20 years, or graduate loans for at least 25 years. Loans would be canceled for those who attended programs with low financial value, as determined by factors such as earnings potential and debt-to-income ratios.
Federal education officials would use existing data to identify borrowers who are eligible for other federal forgiveness programs but have not applied, ensuring they receive relief. The proposal, developed with input from experts and stakeholders, reflects a comprehensive approach to addressing the student debt crisis. A separate rule to provide cancellation for borrowers facing various hardships, including medical and caregiving expenses, is still being finalized. While the process for finalizing the regulation typically takes months, the Biden administration plans to implement some parts of the proposal as early as this fall.
Opposition from conservative lawmakers, who view student loan cancellation as unfair to taxpayers who did not attend college, poses a challenge to the Biden administration’s plan. Republicans argue that broad loan forgiveness is a bailout for college graduates at the expense of other hardworking individuals. Two coalitions of Republican states have sued to block a separate repayment plan that offers an accelerated path to loan forgiveness. However, the White House believes the new plan is legally sound under the Higher Education Act, which grants the education secretary authority to waive student loans in certain circumstances.
President Biden has emphasized the significance of providing “life-changing” relief to student loan borrowers, particularly as the administration seeks to energize young voters ahead of the November election. The proposed regulation represents a targeted approach to addressing the student debt crisis and easing the financial burden on millions of Americans. By incorporating feedback from experts and stakeholders, the Education Department aims to ensure that the plan meets the needs of diverse borrowers facing different circumstances. As the proposal undergoes further review and public comment, the administration remains committed to implementing key components of the plan in the near future.
