The Biden administration unveiled a draft of its latest plan to alleviate student debt for millions of borrowers. Background: Biden has persistently pledged to explore avenues for greater student loan forgiveness following the Supreme Court’s rejection of his broad debt cancellation proposal last year.
To date, the administration has provided $153 billion in student debt relief to 4.3 million individuals through various measures, and the proposed plan aims to extend assistance to over 30 million borrowers. U.S. Secretary of Education Miguel Cardona emphasized the administration’s commitment to addressing issues within the higher education system, stating, “Student loan forgiveness isn’t only about relief for today’s borrowers. It concerns social mobility, economic prosperity, and shaping America to embody its loftiest ideals.”
Key Details: The new plan leverages the legal authority of the Secretary of Education under the Higher Education Act, distinct from Biden’s previous attempt under the COVID-era HEROES Act, which was invalidated by the Supreme Court.
Highlights of the plan include:
– Cancelling up to $20,000 of accrued interest for borrowers, irrespective of income.
– Allowing single individuals earning less than $120,000 or couples earning less than $240,000 enrolled in income-driven repayment plans to have all their interest forgiven.
– No application required for relief.
– Implementing two rules to assist eligible borrowers who haven’t successfully applied for existing forgiveness programs due to paperwork or other barriers.
– Aiding an estimated 2.6 million borrowers with outstanding debt on loans dating back at least two decades.
Process: The administration is undergoing a “negotiated rulemaking” process, with the draft rules subject to a 30-day comment period starting Wednesday. The Department of Education will then review feedback and aim to finalize the rules to commence relief distribution in the fall.
In Response: Under Secretary of Education James Kvaal emphasized the urgency of the relief, stating, “There are 25 million borrowers whose interest is growing faster than they can pay it down. This fact alone underscores the urgent necessity for President Biden’s student loan relief.”