U.S. President Joe Biden is following through with a plan B to successfully alleviate the country’s student loan crisis, pivoting away from blanket relief for all borrowers to focus on those struggling with growing balances.
Biden detailed the plan to a crowd in Wisconsin Monday night, nearly a year removed from when the U.S. Supreme Court struck down his initial loan forgiveness plan that would have benefited up to 40 million borrowers and cost $400 billion. Instead, Biden is zeroing in on removing “runaway” interest impeding graduates from more nimble social mobility.
“Even when they work hard and pay their student loans, their debt increases, not diminishes,” he said, according to AP News. “Too many people feel the strain and stress, wondering if they can get married, have their first child, start a family, because even if they get by, they still have this crushing, crushing debt.”
Whereas the president’s first attempt tried to leverage the Higher Education Relief Opportunities for Students Act of 2003, his counter focuses on the Higher Education Act of 1965, which grants the secretary of education the authority to waive student debt. It is estimated to assist up to 30 million borrowers; however, no price tag has been announced.
Those eligible need not apply. The Department of Education would use national records to assess which students are eligible for loan relief, and in some cases, cancellation.
More from UB: Is higher education leadership changing? Here are 3 warning signs
Five kinds of borrowers could see assistance from the Department.
- Borrowers with debt exceeding what they initially began with. Americans who owe more than they originally borrowed can see $20,000 of unpaid interest wiped from their balance. Those who make less than $120,000 a year, or couples making less than twice that, qualify for complete forgiveness on their interest. Borrowers would still be responsible for the principal amount.
- Borrowers paying off debt for at least two decades. Undergraduates who’ve been paying off loans for 20 years, or graduate credential earners who entered repayment 25 years ago, can qualify for full forgiveness. This could potentially erase loans for up to 2 million people, AP News reports.
- Those facing particular hardship. Individuals considered at high risk of defaulting on their loans or incurring other burdensome debts can have their debts canceled.
- Borrowers who haven’t enrolled in preexisting loan forgiveness programs for which they’re qualified.
- Borrowers who attended “low-value” academic programs. Students who attended institutions that the Department has deemed cheated students, “lost eligibility to participate in Federal student aid programs” or have disproportionately low incomes compared to their student debt are eligible for forgiveness.
The timeline for loan forgiveness
While some officials hope that some provision can go into as early as this fall, the formal proposal won’t be announced for the “coming months,” AP reports. Following the proposal would be a 60-day public comment period. If the rules were to be finalized in November, they wouldn’t truly take effect until July 2025. Such a time window doesn’t lend itself too well with the upcoming November presidential election; Donald Trump could easily scrap the plan if he were to assume power.
