- Biden revealed new details for his second attempt at student loan forgiveness.
- The plan would wipe out up to $20,000 in unpaid interest for 25 million borrowers.
- If implemented as proposed, the comprehensive plan is expected to benefit more than 30 million borrowers.
President Joe Biden’s new plan to cancel student loans would address a key problem for many borrowers: rising interest.
The Biden administration on Monday released new details about its second attempt to cancel student loans after the Supreme Court struck down its first plan. This new plan would benefit more than 30 million student borrowers, according to the White House, while canceling the entire balances of about 4 million borrowers if implemented as proposed.
And one of the most important elements of the plan involves unpaid interest that can accumulate on a borrower’s balance, making it difficult for them to touch the original amount they borrowed. The administration says the plan would forgive up to $20,000 in unpaid interest for 25 million borrowers, 23 million of whom “would likely have their entire balance growth forgiven,” according to the administration’s fact sheet. the White House.
“Now the nightmare of working hard, paying off your loan and continuing to see your loan balances grow more and more month after month is over,” said Education Secretary Miguel Cardona. , to journalists during a press call on Sunday. “And we are proud to announce what we are announcing today.”
According to the White House, this interest provision would apply to any borrower, regardless of income. Low- and moderate-income borrowers enrolled in an income-driven repayment plan would be eligible to have the entire amount their balance has increased since repayment began – this group includes single borrowers who earn 120 $240,000 or less and married borrowers who earn $240,000 or less.
A senior administration official told reporters at the news conference that while the interest relief would be a one-time measure, borrowers would continue to benefit from the provisions of the SAVE income-driven repayment plan, including the prevention of capitalization of interest which would fall within the framework of the plan. effective in July.
Along with interest relief, the plan proposed debt relief for borrowers who would be eligible for forgiveness through a repayment program, such as Public Service Loan Forgiveness, but who are not yet there registered. It would also cancel student debt for borrowers who began repaying at least 20 years ago, and it would identify solutions to provide relief to borrowers facing financial hardship.
Proposed text for these rules will be released in the coming months, according to senior administration officials, after which the public will have an opportunity to comment. The plan could come into effect as early as this fall.
To be sure, these proposals are still subject to change – and they could also face legal challenges from conservative groups. The top Republican on the Senate Education Committee, Bill Cassidy, said in a statement Monday that the proposed relief is “an unfair ploy to buy votes before an election and does absolutely nothing to address the high cost of education that puts young people into debt.
Nonetheless, administration officials said they believed the proposal was consistent with the Supreme Court’s decision and had confidence in the legal authority to implement it. Senate Majority Leader Chuck Schumer said in a statement Monday that “Democrats will continue to relentlessly do everything we can to lower costs and make college more affordable.”
“After the MAGA Supreme Court struck down the most ambitious student debt cancellation last year and snatched a financial lifeline from those who need it most, this new action by President Biden shows that the Democrats are committed to fixing the federal student loan program so that higher education can finally be everyone’s ticket to the middle class,” Schumer said.
businessinsider
