The Biden administration announced its new proposal for student loan debt on Monday. If finalized, it would reduce or eliminate debts of up to 25 million borrowers.
These plans are aimed at borrowers with “runaway” interest and those who have made payments for over 20 years. It also aims to help those who are eligible for forgiveness under income-driven repayment schemes (IDR), as well as individuals experiencing financial hardship.
The plans will give borrowers a $20,000 loan forgiveness regardless of their income for any balances that have risen due to unpaid interests since they began repayment. The Hill explains that those who qualify for SAVE IDR will get their entire unpaid interest balance forgiven. This would allow 25 million Americans to get relief from the balance growth due to unpaid interest. 23 million Americans would see their entire balance growth canceled.
The administration also wants to provide automatic debt relief to those who are eligible for the SAVE program, Public Service Loan Forgiveness Program, and other loan forgiveness programs but have been unable to receive their relief due to red tape. This option would allow 2 million Americans to get their full loans forgiven.
The administration also wants to provide relief to those who have been enrolled in education programs with low financial value that were deemed inadequate by the Department of Education. It will also help borrowers who face difficulties in repaying loans, including those at risk of defaulting and families who are burdened by other debts, like medical debt.
The White House reports that the Biden-Harris Administration has approved $146 billion for student debt relief to 4 million Americans through “more than two dozen executive orders.”
Biden attempted to forgive student loans via the executive pen for the first time in 2022, just before midterm elections. The Supreme Court blocked the attempt on good grounds. Since then, the administration has tried to find any way possible to defy the court. Biden even boasted about defying the Supreme Court.
Biden stated in February that “early in my tenure, I announced an important plan to provide debt relief for millions of working families’ college student loans.” Tens of millions in debt were literally on the verge of being canceled. My MAGA Republican friends, elected officials, and special interest groups sued us. The Supreme Court blocked the lawsuit. “But that didn’t stop me.”
The Biden administration will release the proposed rules of this new debt relief in the coming months to maximize the political benefits. If these plans are finalized in the proposed form, the Administration will begin to cancel up to $20,000 of interest for millions and complete loan forgiveness for millions this fall.
The White House chided Republicans for opposing mass debt relief. “While Republican elected representatives try to block millions of their constituents from receiving cancellation of student debt, President Biden pledged to use all tools available to cancel student loans for as many borrowers, as quickly and as efficiently as possible.”
