“President Biden will use every tool available to cancel student loan debt for as many borrowers as possible, no matter how many times Republican elected officials try to stand in his way,” White House press secretary Karine Jean-Pierre told reporters Sunday.
The Biden administration has worked through a negotiated rulemaking process at the Education Department to create new paths to loan forgiveness for more borrowers. The administration said the draft rule will be released for public comment in the coming months. The final regulation will be implemented next summer, but features of the plan will be rolled out this fall, according to the administration.
“Now there’s an end to the nightmare of working hard, making loan payments, and still watching your loan balances get bigger and bigger month after month,” Education Secretary Miguel Cardona said on a call with reporters on Sunday. “This work is nothing short of transformative. That’s why we’re unapologetic about this fight.”
The proposed plan focuses on select groups of borrowers: those who owe far more than they originally borrowed because of interest; those who have been paying for at least 20 or 25 years; those who attended career training programs that led to high debt loads or low earnings; those who are eligible for existing forgiveness programs but never applied; and those experiencing hardship.
A key feature of the plan that will come online early is the elimination of up to $20,000 in accrued interest regardless of a borrower’s income. Single borrowers earning less than $120,000 or married couples earning less than $240,000 could qualify to have all of their accrued interest forgiven if they are enrolled in an income-driven repayment plan. No application would be needed and an estimated 25 million people would benefit from the reduction in interest, according to the White House.
Other features of the plan that would take effect next year include automatically eliminating the debt of borrowers in repayment for more than 20 years and people who qualify for relief but haven’t applied.
This is Biden’s most significant attempt at large-scale student loan forgiveness since the Supreme Court blocked his plan to cancel more than $400 billion in student loans last summer. That plan would have delivered up to $20,000 in loan cancellation for 40 million borrowers, benefiting more people than the latest iteration.
The new plan takes a more targeted approach to loan forgiveness and relies on the authority of the Higher Education Act, giving it firmer legal ground than the debt relief program struck down by the court. But much like the last plan, Biden’s latest bid for sweeping debt relief could face legal challenges from conservative groups
