Biden’s student loan 'Plan B': New proposal could wipe out debt for 30M borrowers
This latest student loan forgiveness debt relief proposal, which the Education Department has been working on to replace the one dashed by the Supreme Court last year, will likely be challenged in court as well.
The Biden administration on Monday announced its latest plan to forgive student loan debt. The proposal could fully cancel the debt of more than four million borrowers who have been paying down debt for at least two decades; provide relief of $5,000 or more to more than 10 million borrowers; and eliminate interest past the original loan amounts of 23 million borrowers.
“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 said.
Although the proposed regulations would not fully take effect until at least July 2025, the administration hopes to provide some relief as soon as this fall, ahead of the November presidential election. Officials defended the latest effort to chip away at debt after the U.S. Supreme Court shot down a comprehensive loan forgiveness plan last year. “It means breathing room,” Education Secretary Miguel Cordona said. “It means freedom from feeling like your student loan bills compete with basic needs like grocery or health care.”
Cordona, Biden and Vice President Kamala Harris plan to travel across the nation on Monday to promote the plan.
Biden’s first attempt at delivering broad student loan forgiveness relied on his emergency authorities during the pandemic.
Legal challenges halted the plan before it got off the ground, and the Supreme Court struck it down. The president then promised to seek changes to federal higher education law, triggering a process involving significant government red tape. After months of sometimes contentious meetings, a panel of student loan experts ultimately greenlit parts of Biden’s new plan in February.
Biden’s old plan hit legal snags because it would have relieved the student loan debt for broad swaths of borrowers. His new plan makes similar promises but in different ways:
- Borrowers experiencing specific forms of hardship, such as big expenses for child care and medical bills, could have their debt completely canceled by filling out an application.
- The Education Department also hopes to use government data to calculate which borrowers are likely to default on their loans. These borrowers also could have their debt cancelled.
- Individual borrowers who earn $120,000 or less could see the entire amount of extra interest on their loans forgiven if they enroll in Biden’s income-driven repayment plan.
- Borrowers who have been in repayment for at least 20 years also may have their balances eliminated.
Related: Biden ‘forgives’ another $6B in student debt for public service workers
If the new plan is fully implemented, it would bring the number of borrowers who’ve seen some or all of their debt forgiven during the president’s term to more than 30 million, according to the administration.
However, the new plan almost certainly will be challenged in court. “The Biden administration is once again looking to have a huge, unilateral — and hence unconstitutional — student debt cancellation,” Neal McCluskey of the libertarian thinktank The Cato Institute said on X.