25M could get student debt forgiveness: Who's eligible in Biden’s new mega-plan?

The Biden administration on Tuesday filed paperwork for a new regulation that would cancel or reduce student loan debt for more than 25 million additional borrowers.

“Today’s announcement shows that the Biden-Harris administration is continuing to fulfill our promises to fix a broken higher education system,” U.S. Secretary of Education Miguel Cardona said. “Student loan forgiveness isn’t only about relief for today’s borrowers. It’s about social mobility, economic prosperity and creating an America that lives up to its highest ideals.”

The latest proposal, which is more targeted than the one the U.S. Supreme Court struck down last year, was posted in the Federal Register for a 30-day comment period. If implemented as proposed, it would bring the total number of borrowers getting relief to more than 30 million. To date, the administration has approved debt cancellation for nearly 4.3 million borrowers, totaling $153 billion in debt forgiveness through various actions.

The new paperwork filed by the Education Department includes four categories of forgiveness, and a separate proposal will be filed later addressing how people facing various kinds of hardship can get relief.

• The broadest forgiveness category would help borrowers who owe more than they originally borrowed because of runaway interest. It would eliminate up to $20,000 in interest for anyone in that situation. Those with annual incomes of less than $120,000 who are enrolled in income-driven repayment plans would get all their interest erased, with no maximum limit.
• Another category would cancel loans for people who have been paying back their undergraduate student loans for at least 20 years, and those who have been paying graduate loans for at least 25 years.
• It would automatically cancel loans for those who went to colleges or programs considered to have low financial value.
• Borrowers who are eligible for other federal forgiveness programs but haven’t applied also would get loans erased. It’s intended to reach those who don’t know about other programs or have been deterred by complicated application processes.

The Biden administration said it plans to start implementing some parts of the new proposal as soon as this fall, ahead of the presidential election, using the education secretary’s authority to implement rules early in certain cases. Republicans staunchly oppose any broad student loan cancellation, saying it’s an unfair bailout for people who went to college.

Related: Biden’s student loan ‘Plan B’: New proposal could wipe out debt for 30M borrowers

“Where is the relief for the guy who didn’t go to college but is working to pay off the loan on the truck he takes to work?” asked Sen. Bill Cassidy, R-La., the ranking member of the Senate Health, Education, Labor and Pensions Committee. “What about the woman who paid off her student loans but is now struggling to afford her mortgage? Instead, the Biden administration is sticking these Americans with the bill of someone else’s student debt.”