Biden's Student Loan Forgiveness Plan Advances as Proposed Regulation

Biden introduces new measures to ease student debt burdens

by Zain ul Abedin
Biden's Student Loan Forgiveness Plan Advances as Proposed Regulation
© Anna Moneymaker/Getty Images

President Joe Biden's revised approach to student loan cancellation is gaining traction. It is advancing as a proposed regulation with a robust framework aimed at offering significant relief. As the November elections approach, this move could reinvigorate young voters and fulfill a pivotal campaign promise.

On Tuesday, the Education Department took a decisive step by filing new regulatory paperwork, sparking a 30-day public comment period followed by a subsequent review before finalization. This initiative marks a strategic pivot from last year's broader proposal, which the U.S.

Supreme Court overturned. Leveraging a different legal foundation, the current proposal aims to alleviate or eliminate the student debt of over 25 million Americans. Despite facing potential legal challenges from conservative groups, who argue the plan unfairly burdens taxpayers who do not benefit from college education, the proposal continues to move forward.

During a recent visit to Wisconsin, President Biden underscored the transformative potential of his plan, specifying five beneficiary categories poised to receive aid. The filing details four of these five categories, with a fifth focusing on borrowers under severe financial strains, to be addressed in a subsequent proposal.

Key aspects include canceling up to $20,000 in interest for borrowers whose debt has ballooned due to accruing interest and special provisions for those in income-driven repayment plans.

Expanding Debt Relief

Further, the plan promises automatic debt cancellation for individuals who have been repaying their undergraduate loans for at least 20 years, or graduate loans for 25 years.

It also targets borrowers from educational programs that deliver minimal financial return, enabling debt relief for graduates whose earnings are comparable to those without a college degree, or whose debt disproportionately outweighs their income.

The initiative extends to those eligible for other federal forgiveness schemes yet haven't applied, by proactively identifying such individuals through existing data and offering automatic relief. This measure aims to bridge the information gap and simplify the complex application process that often deters borrowers.

Crafted through extensive consultations with stakeholders including students, college officials, and loan servicers, the proposal reflects a comprehensive approach, enriched by diverse insights. While the plan introduces a broad spectrum of relief, it also emphasizes targeted support for borrowers facing hardships such as high medical expenses or caregiving burdens, with further details on this aspect expected in the near future.

The Biden administration, optimistic about the proposal's legal robustness based on the authority granted by the Higher Education Act, anticipates initial implementation phases could commence this fall. However, the proposal has met with resistance from Republicans, who criticize it as an inequitable solution that neglects non-college-educated workers.