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Biden to announce new student loan forgiveness proposals

President Biden to Announce New Proposed Partial or Complete Measures student loan forgiveness Monday in Wisconsin.

The primary goal of the latest round of student loan forgiveness proposals is to target accrued and capitalized interest on student loans. According to the Biden administration, 25 million Americans who used federal student loans now owe more than they originally borrowed because of accrued interest charges.

However, the president’s new loan forgiveness proposal will have to overcome several hurdles before student loan balances can be reduced.

The plan to target interest on student loans will be subject to approval in the federal regulatory process, which top officials said will begin in the coming months and will also include a public comment period.

Reporters asked senior administration officials when recipients of U.S. student loans could have their interest balances canceled, if this new proposal is approved.

Officials would say only that partial forgiveness of the loan could occur “in early fall.”

If the plan is approved, officials predicted that 23 million U.S. borrowers would likely see “their entire balance growth wiped out.”

Under the interest-specific loan forgiveness plan, regardless of income, any American with federal student loans would be eligible for a one-time “forgiveness” of up to $20,000 of the amount that the balance of a borrower has increased due to unpaid interest on their loans. after entering the refund,” the Ministry of Education said.

But some low- and moderate-income borrowers could benefit from waiving more than $20,000 in specific interest charges.

For single borrowers earning less than $120,000 per year and enrolled in the Department of Education’s income-driven repayment plans, such borrowers “would be eligible for a waiver of the entire amount their balance has increased since inception reimbursement,” the ministry said.

The student loan proposals announced by Mr. Biden also include several other targeted loan forgiveness options.

For example, the Department of Education is proposing to automate loan forgiveness programs already in place, such as the state student loan forgiveness plan and the process that forgives remaining undergraduate student loan balances after 20 years of payments. This means borrowers would no longer have to apply for these forms of loan forgiveness.

And the administration also said it was pursuing “specific action dedicated to canceling student debt for borrowers facing challenges in their daily lives that prevent them from repaying their loans in full, now or in the future.” . However, few additional details were shared by officials regarding this proposed “hardship.”

This series of new loan forgiveness proposals will also have to withstand possible legal challenges.

The president’s initial loan forgiveness proposal, which would have canceled about $10,000 for many student borrowers, was invalidated by the Supreme Court Last year. The Department of Education relied on the HEROES Act of 2003 as legal justification erasure a debt of approximately $430 billion. The law authorizes the Secretary of Education to “waive or modify” student financial aid programs for borrowers “in connection” with a national emergency, such as the pandemic. But the Supreme Court ruled that the law does not grant the secretary that power.

Additionally, several Republican attorneys general are now challenging Mr. Biden’s second loan forgiveness process — the “SAVE Plan” — which is based on borrowers’ income and effectively cancels monthly payments for low-income Americans.

Asked about possible legal obstacles, senior administration officials said they were “confident” in the legal basis.

Melissa Quinn contributed to this report.

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