Biden administration proposes new student debt relief. Who would qualify this time?
President Joe Biden’s administration released a new proposal for student debt relief. Here’s what you should know.
Last summer, the Supreme Court struck down the $400 billion plan that would have canceled or reduced federal student loans for 43 million people, ruling that Biden’s administration overstepped its authority. At the time, Biden announced he would pursue a new path to provide relief.
“College is meant to lead to a better life, but too many students end up struggling due to their student debt,” Under Secretary James Kvaal said in a news release.
The proposal released last week focuses on providing relief for borrowers facing hardship, according to a news release from the U.S. Department of Education. It outlines factors used to identify that hardship, such as a borrower’s total balance and required payments relative to their household income, as well as whether a borrower is cost-burdened by essential expenses such as health care or childcare.
It would also allow for automatic relief to borrowers highly likely to be in default in two years.
“The ideas we are outlining today will allow us to help struggling borrowers who are experiencing hardships in their lives, and they are part of President Biden’s overall plan to give breathing room to as many student loan borrowers as possible,” Kvaal said. “It’s an important part of the Biden-Harris Administration’s permanent solutions to the problem of unaffordable loans.”
The proposal will be discussed during a rulemaking session on Feb. 22 and 23, according to the release.
Five groups of student loan borrowers could benefit from this regulatory process and the plan Biden announced last summer, including the following those who:
Currently have outstanding federal student loan balances that exceed what they originally borrowed.
Have loans that first entered repayment 20 or 25 years ago.
Took out loans to attend career-training programs that created unreasonable debt loads or provided insufficient earnings for graduates, as well as borrowers who attended institutions with unacceptably high student loan default rates.
Are eligible for forgiveness under repayment plans like the Saving on a Valuable Education plan or targeted relief programs, or closed school loan discharges, except they have not applied for such relief.
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