Topline
President Joe Biden unveiled a sweeping new plan Monday aimed at erasing or lowering student loan debt for more than 30 million people, the second attempt to offer widespread forgiveness after the Supreme Court blocked the administration’s inaugural program last summer.
Biden is in Madison, Wisconsin, Monday to unveil the plan.
Key Facts
The proposal would cancel up to $20,000 in interest for more than 25 million people who owe more than they originally borrowed regardless of income.
Those enrolled in the Saving on a Valuable Education (SAVE) repayment plan and other income-driven repayment (IDR) plans would be eligible to have the “entire amount their balance has grown since entering repayment” forgiven—including single borrowers earning $120,000 or less and married borrowers earning $240,000 or less.
Debt would automatically be forgiven for eligible borrowers who have not applied for relief due to “paperwork requirements, bad advice, or other obstacles,” according to a White House press release—including those that took out $12,000 or less and have been in repayment for a decade under the SAVE plan; those enrolled in Public Service Loan Forgiveness (PSLF) repayment that have been working for 10 years and have made 120 months of payments; and other routes of forgiveness, such as the closed school discharge plan.
The proposal would also cancel debt for more than 2.5 million borrowers who entered repayment more than 20 years ago, as well as borrowers enrolled in low-financial-value programs and borrowers experiencing hardship making loan payments.
The administration plans to release the proposal, under the federal rule-making process, in the coming months, according to the release, which could be implemented as soon as the fall—but legal challenges are expected.
Crucial Quote
“While a college degree still is a ticket to the middle class, that ticket’s becoming much too expensive,” Biden said in a speech in Madison, Wisconsin, to announce the plan Monday. “The ability for working and middle-class folks to repay their student loans has become so burdensome that a lot can’t repay for even decades after being in school.”
Big Number
More than 30 million. That’s the amount of borrowers that would experience relief under this proposal, including forgiving accrued interest for 23 million, canceling the full amount of debt for 4 million and providing at least $5,000 in relief for more than 10 million. The administration has issued $146 billion in forgiveness thus far, according to the release.
What To Watch For
Key administration officials will be speaking with borrowers Monday, according to the White House. Vice President Kamala Harris is heading to Philadelphia while Second Gentleman Douglas Emhoff is traveling to Phoenix, and Secretary of Education Miguel Cardona is going to New York City.
Key Background
Biden has made student loan forgiveness an administration priority since he took office in 2021. He initially proposed a widespread forgiveness plan in 2022 that would have provided borrowers whose incomes fell below $125,000 with up to $20,000 in relief. Following a series of legal challenges and Republican uproar, the Supreme Court ultimately axed the plan last August. However, the administration has since implemented a number of actions, while working on the new forgiveness program, to provide relief for certain borrowers.
Further Reading
Supreme Court Strikes Down Biden’s Student Loan Forgiveness (Forbes)
Biden Cancels More Student Loans, Months Ahead Of Schedule (Forbes)
Here’s what we know so far about Biden’s ‘Plan B’ for student loan forgiveness (CNBC)
