On Monday, the White House and Department of Education released details of the administration’s plan to cancel student debt for millions of borrowers after the Supreme Court overturned its first attempt in June of the year last.
According to a White House fact sheet, the new plan – if implemented as proposed – would provide debt forgiveness for more than 30 million borrowers when combined with previous actions of debt relief. It would “completely eliminate” all accrued interest for 23 million borrowers, give more than 10 million borrowers relief of at least $5,000, and cancel the entire balances of 4 million borrowers.
“These historic actions reflect President Biden’s determination that we cannot allow student debt to leave students worse off than before they entered college,” said Under Secretary of Education, James Kvaal, in a press release. “The president has asked us to complete these programs as quickly as possible, and that is exactly what we are going to do.”
The plan has been in the works for months. As the Department of Education seeks to implement this relief under the Higher Education Act of 1965, it must conduct a series of negotiation sessions with stakeholders to help determine the final plan for relief. The last trading session ended in February and Monday’s announcement brought new details on which borrowers will benefit this time.
Specifically, borrowers whose balances increased due to unpaid interest would see up to $20,000 in debt forgiveness, regardless of their income. The plan also aims to cancel student debt for borrowers who are eligible for relief under certain repayment plans, like Public Service Loan Forgiveness or the SAVE Income-Driven Repayment Plan, but who are not yet enrolled .
“Too many borrowers eligible for relief – including immediate forgiveness – have not been able to overcome administrative requirements, poor advice or other obstacles,” the fact sheet states.
Additionally, the plan would cancel student debt for borrowers who started repaying at least 20 years ago – and it would also provide relief to borrowers who attended “low financial value programs” that left them with too much debt. debts compared to post-graduation. earnings.
The fact sheet also appears to respond to advocates who have pushed for a category of relief for distressed borrowers. Although it did not define specific categories for determining financial hardship, it said the relief could benefit “borrowers who are at high risk of defaulting on their student loans, who may be eligible for a automatic relief, or to families who are burdened by other expenses like medical care.” debts or child care that may seek relief in the future.
A senior administration official told Business Insider on a press call Sunday that the goal is for the majority of relief to be automatic, meaning borrowers won’t have any action on their part to become eligible. However, the administration must finalize more details when determining hardship relief.
Those plans aren’t set in stone yet: Senior officials said the administration would release proposed text for the rules “over the coming months.” Once finalized, borrowers could begin receiving relief as early as this fall. The public will also have an opportunity in the coming months to comment on the proposals, and the administration could choose to modify its plan based on the responses it receives.
Although it is a narrower relief measure than the original plan struck down by the Supreme Court, it is likely to face legal challenges from conservative groups. which could hinder or block its final implementation. Nonetheless, senior administration officials told reporters that the new plan was consistent with the Supreme Court’s ruling and could be implemented within the law.
Biden is expected to formally announce the new plan during a speech in Wisconsin Monday afternoon.
businessinsider
