Biden's team is giving student debt relief another try—here's what you need to know.
Following the Supreme Court's 2023 decision to block President Biden's proposal to forgive up to $20,000 in federal student loans per borrower, the Education Department has initiated a negotiated rulemaking process to draft a new regulation that would allow mass student debt cancellation. The Biden administration is looking ahead to their next effort to alleviate the burden of student loans for tens of millions of Americans. Instead of his earlier executive action approach, the president has now tasked the Education Department with navigating the regulatory process. Experts believe this strategy will increase the administration’s odds versus certain legal challenges. “Today, the Biden-Harris administration takes another step forward in our drive to deliver student debt relief to borrowers who’ve been failed by a broken system,” stated U.S. Secretary of Education Miguel Cardona.
The new loan forgiveness plan is in the final stages of a rulemaking process that will be completed in the fall, mere weeks before the 2024 presidential election. As the government works to finalize a new set of regulations that will make loan forgiveness a reality, the Education Department is encouraging borrowers to contact their loan servicers before August 30 if they would like to opt out. Those borrowers who are seeking relief do not have to take any action. For those who do opt out, the decision is final, according to the Education Department. Only borrowers who have entered repayment after the finalization of the proposed rules will be eligible for the relief.
The suggested scheme suggests that specific borrowers may be eligible for either a partial or complete discharge of debt under four specific circumstances: those whose debt has ballooned due to accumulating interest; those who have been making payments for at least 20 or 25 years; those who attended career training programs resulting in high debt or low earnings; and those who qualify for existing forgiveness programs but have never applied.
Leading up to the midterm election season, the focus on Biden's debt relief regulations will only increase, despite the president not being involved in the campaign. The anticipated Democratic front-runner, Vice President Harris, is a big advocate of the administration's plans, which have relieved financial strain from millions of student loan borrowers and she has vowed to maintain this trajectory if she takes office. This stance will likely resonate with progressive voters who praise Biden for cancelling over $168 billion in student loan debt, but possibly increase mounting resistance from conservative voters who view this stance as fiscally imprudent.
The U.S. Department of Education will start reaching out via email to borrowers who might qualify for the broad loan cancellation, according to the department. The final rule on this debt relief is anticipated to be published by the Education Department in October.
