President Joe Biden will announce Monday that he plans to give as many as 25 million Americans relief from their student loan debts, according to the administration.
The new regulations, the specific details of which are expected to be revealed in the coming months, would provide relief to those whose payments have ballooned because of unpaid interest, the Wall Street Journal reported.
The program will be aimed at those who have been making payments for years, but because of interest rates haven’t yet paid off their balances.
In addition, the new plans target:
- Those who already qualify for student loan forgiveness under existing programs but have not applied.
- Those who entered repayment at least 20 years ago.
- Those who enrolled in “low financial value” programs, which left students in debt but without good job prospects and were deemed ineligible to participate in federal student loan programs or were denied recertification.
- Those experiencing financial hardship.
The new proposals must still go through a public comment period. Then, after reviewing those comments, the Department of Education will publish a final version of the rule.
Biden’s original proposal of eliminating student debt for millions was struck down by the U.S. Supreme Court.
In the ruling, the court said the administration did not have the authority to wipe out the debt.
This plan would use the Higher Education Act to offer debt forgiveness, sources told the
Journal.
According to NPR, the administration is using a process called “negotiated rulemaking” in the hope that the proposal can survive legal challenges.
The negotiated rulemaking process is slower and requires a period of public comment on proposed rules.
The administration has tried several plans to erase debt since the Supreme Court in June rejected Biden’s student loan forgiveness program, which would have canceled as much as $20,000 in student loan debt for individual borrowers, totaling $430 billion.
A plan announced by Biden in July aims to adjust the way the Education Department calculates certain student loan payments. The adjustments are being made, the department said, to correct past errors in counting payments and the result would show that borrowers made payments that were not counted correctly toward their debt.
What does the new plan offer?
The administration proposes to cancel up to $20,000 in unpaid interest for borrowers who owe more than the initial amount they took out in loans.
Individual borrowers who earn $120,000 or less and married couples who earn $240,000 or less would be eligible to have that interest erased from the total debt.
The proposal applies to undergraduate debt that borrowers have been paying back for 20 years and graduate-school debt that has been in repayment for 25 years or more, according to White House sources who spoke to the Journal.
Federal loans, including consolidated loans, would qualify for relief, the sources told the Journal.
The new plan would be released in phases over the coming months, the administration said, according to CNN. The plan to eliminate accrued interest could go into effect in the fall, before the November presidential election, according to the Journal.
How will it work?
The program will be rolled out in the coming weeks, the administration said, so some details are not yet available.
Most of the relief will go into effect automatically, though in some cases the Education Department might ask for additional information to prove that a borrower is facing financial hardship.
Borrowers who did not apply for earlier student loan forgiveness programs are eligible for the program.
The administration released numbers on Monday, saying the program will help as many as 25 million borrowers. Twenty-three million would see the entirety of their interest-related balance growth forgiven, the White House told the Journal.
Another 2 million who would receive forgiveness under the new plan include borrowers who have been in repayment for 20 or more years.
The Biden administration has forgiven $127 billion in student loan debt for nearly 3.6 million borrowers to date.
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