Biden admin shares proposal for new student debt relief plan
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The Biden administration on Tuesday released a draft of its new plan to provide student debt relief to millions of borrowers.
The big picture: Biden has continuously promised to find ways to deliver more student loan forgiveness after the Supreme Court blocked his sweeping debt cancellation plan last year.
- The administration has so far doled out $153 billion in student debt relief to 4.3 million people through various actions, and the new plan, if approved, would increase that aid to help more than 30 million borrowers.
U.S. Secretary of Education Miguel Cardona said in a statement the administration is fulfilling "our promises to fix a broken higher education system."
- "Student loan forgiveness isn't only about relief for today's borrowers," he added. "It's about social mobility, economic prosperity, and creating America that lives up to its highest ideals."
Between the lines: The new plan relies on the legal authority of the Secretary of Education under the Higher Education Act, which contrasts with the COVID-era HEROES Act Biden attempted to use for his first plan that was ultimately struck down by the high court.
Zoom in: More than 25 million Americans owe more in student loans than they originally borrowed, per the administration.
- Under the new plan, up to $20,000 of a borrower's accrued interest could be cancelled, regardless of income.
- A second rule would make it so that single people making less than $120,000 or couples making less than $240,000 who are enrolled in an income-driven repayment plan could have all of their interest forgiven.
- No application will be required to receive the relief.
The draft includes two rules that could help some borrowers who are eligible for relief under existing forgiveness opportunities but have not successfully applied due to paperwork requirements or other obstacles.
- The plan would also help an estimated 2.6 million borrowers who still have outstanding debt on old loans that entered repayment at least two decades ago.
Where it stands: The administration is undergoing a "negotiated rulemaking" process, as part of which the draft rules will go through a 30-day comment period starting Wednesday.
- The Department of Education will then consider the comments and aim to finalize the rules in time to start delivering relief in the fall.
What they're saying: "These distinct forms of debt relief are designed for borrowers struggling with their loans – and that's a lot of people," Under Secretary of Education James Kvaal said in a statement.
- "There are 25 million borrowers whose interest is growing faster than they can pay it down. That fact alone shows how badly President Biden's student loan relief is needed," he added.
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