1. Borrowers with “rampant interests”
According to the Biden administration, more than 25 million borrowers owe more than they originally borrowed in federal student loans, due to accrued interest charges.
Under the plan, these borrowers could get up to $20,000 in unpaid interest on their debt forgiven, regardless of their income. Some low- and moderate-income borrowers, if enrolled in an income-driven repayment plan, could see the entire interest balance accrued on their federal debt since repayment began forgiven.
Anyone enrolled in the Saving on a Valuable Education (SAVE) plan or any other income-based repayment plan would be eligible without having to apply.
2. Borrowers eligible for forgiveness programs, who have not applied
Consumer and borrower advocates complain that it can be difficult to learn about and access government debt forgiveness programs.
In addition to interest forgiveness, Biden’s new plan should also forgive debt for borrowers otherwise eligible for relief through Public Service Loan Forgiveness or the SAVE plan or other income-driven repayment plans , but who did not apply successfully.
The Department of Education will review borrowers’ accounts to identify those who might be eligible for this type of relief, which would take effect automatically, the administration said.
3. Borrowers who started repaying more than 20 years ago
An additional 2.5 million borrowers would benefit from the forgiveness of student loans held for two decades or more.
Borrowers with undergraduate debt would be eligible for forgiveness if they began repaying on or before July 1, 2005, and borrowers with graduate debt would be eligible if they began repaying on or before July 1, 2005. late July 1, 2000, the administration said, and both direct loans and consolidated loans are eligible for relief.
4. Borrowers enrolled in “low value” universities
Graduates with loans from “low value” institutions or programs would also be eligible for loan forgiveness.
Under this part of the plan, borrowers who attended institutions or programs that closed or “failed to provide sufficient value” – meaning graduates did not end up in a better situation than someone with a high school diploma – could apply for relief.
“Low value” institutions are typically colleges that have lost eligibility to participate in the federal student aid program or been denied recertification because they cheated or took advantage of students, according to the Biden administration .
Under these same guidelines, the Department of Education has already canceled the student loans of more than 1 million students who attended certain for-profit schools, including Corinthian Colleges and ITT Technical Institute.
5. Borrowers in difficulty
Although harder to quantify, “millions of borrowers could be eligible for relief if they experience difficulties in their daily lives that prevent them from repaying their loans in full now or in the future,” the administration said about another element of the plan that would cancel student debt for borrowers who are at high risk of defaulting on their student loans or families burdened with other expenses like medical debt or child care.
With a higher debt burden, Black and Latino borrowers will disproportionately benefit from this relief, the White House also said.
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