Biden promises student loan relief as early as this fall through new plan

President Joe Biden’s administration gave a much-anticipated preview Monday of his final plan to bring student debt forgiveness to millions of Americans. 

More than 4 million student loan borrowers − many of whom have been paying down their debt for 20 years or more − could see their debt fully canceled under the proposal, according to the White House. In addition, more than 10 million borrowers could get $5,000 or more in relief.

Biden also hopes to eliminate interest past the original loan amounts of 23 million borrowers.

Though experts say the regulations aren’t expected to fully take effect until July of next year at the earliest, the Department of Education is considering taking actions to expedite parts of the plan, which could bring relief to some borrowers as soon as this fall. 

The announcement represents Biden's most aggressive action yet trying to work around the Supreme Court’s rebuke of his first student loan relief gambit, which would have canceled up to $20,000 in student loan debt for millions of low- and middle-income borrowers.

The final regulation hasn’t been released and it isn't likely to be set in stone for months. The White House’s eagerness to promote it at this in-between moment underscores how central student loan forgiveness has become in Biden’s reelection effort. 

Biden and his surrogates – including Education Secretary Miguel Cardona, Vice President Kamala Harris and second gentleman Douglas Emhoff – will fan out across the U.S. on Monday to tout the proposal. 

At an event Monday in the crucial swing state of Wisconsin, Biden argued that student loan payments too often prevent Americans from spending money that could otherwise stimulate the economy. The gains he projects from his forgiveness plan would far outweigh the costs, he said. 

“That’s not hyperbole,” he said. “That’s the truth.”

After months of talks, student loan panel greenlights plan

Administration officials say they’re confident the plan will pass legal muster. But potential court challenges could derail the federal government’s timeline for waiving debt. Meanwhile, the bungled rollout of a new college financial aid form has prompted Republicans such as Sen. Bill Cassidy, R-La., to criticize the Education Department for prioritizing student loan forgiveness.

“It seems the reason students don’t know what schools they can afford this year is because Biden’s Department of Education is spending its time concocting student loan schemes instead of fixing the mistakes they’ve already made on FAFSA," Cassidy said in a statement Monday.

The Job Creators Network Foundation, a conservative advocacy group, said the latest attempt at student loan forgiveness is illegal, given the Supreme Court's ruling last year.

"The Biden administration is lawlessly ignoring the Supreme Court and Congress by launching another massive student loan bailout program," Elaine Parker, the organization's president, said in a statement Monday. "Biden has made it clear that he won't respect this decision. He is acting as a King, not a president." 

On a call with reporters Sunday, Cardona said the administration remains "unapologetic" about its aggressive debt cancellation strategies. 

"It means breathing room," he said. "It means freedom from feeling like your student loan bills compete with basic needs like grocery or health care." 

High-profile Democrats, including Senate Majority Leader Chuck Schumer, and student loan relief advocates commended the White House's proposal.

Aissa Canchola Bañez, policy director at the Student Borrower Protection Center, said the plan provides a "road map" for the administration to deal with "a hostile Supreme Court majority captured by right-wing special interests."

The surest path to relief, she said in a statement, is to "call the high court’s bluff by aggressively using the full power of the law and delivering for working people."

Biden’s first attempt at delivering broad student loan forgiveness relied on exercising his emergency authority during the COVID-19 pandemic. Legal challenges halted the plan before it got off the ground, though, and last summer the Supreme Court struck it down.

The president immediately pledged to come up with a Plan B. Rather than use his emergency powers, he promised to seek changes to federal higher education law, triggering a process that involved a lot more government red tape.

After months of sometimes contentious meetings, a panel of student loan experts greenlighted parts of Biden’s new plan in February.

Who could get relief?Biden's student loan relief plan would help borrowers with old loans, ballooning interest

Who could get student loan forgiveness under Biden’s new plan?

Biden’s old plan hit legal snags because it would have relieved the student loan debt for broad swaths of borrowers. His new plan makes similar promises but in different ways.

Borrowers experiencing specific forms of "hardship," such as big expenses for child care and medical bills, could get their debt entirely canceled if they fill out an application. The Education Department also hopes to use government data to calculate which borrowers are likely to default on their loans. They could have their debt canceled, too.

Individual borrowers who make $120,000 a year or less could see all the extra interest on their loans forgiven if they enroll in Biden’s income-driven repayment plan. In addition, people in repayment for at least 20 years may also have their balances wiped.

Biden focuses on debt relief as election, lawsuits loom

Because student loans are a top issue for voters, Biden is keen on finalizing the new rules as soon as possible.

Still, Monday's announcement won’t be the end of the story. Legal challenges are likely – Biden’s conservative opponents have been poised to sue the administration over student loan forgiveness efforts at every turn. 

In late March, attorneys general in nearly a dozen red states sued in federal court over Biden’s signature student loan repayment initiative. The income-driven plan, known as Saving on a Valuable Education, or SAVE, was launched last fall and has led to the cancelation of balances for tens of thousands of participants. 

When news began percolating Friday that Biden was hinting at more student debt relief this week, critics were quick to pounce.

"The Biden administration is once again looking to have a huge, unilateral – and hence unconstitutional – student debt cancellation," Neal McCluskey of the libertarian think tank the Cato Institute, said on X, citing a Wall Street Journal article that first reported the news. 

Deep look:Biden promised to make student loan forgiveness in bankruptcy court easier. But has he?

What student loan debt has Biden already canceled?

The administration has already used several other creative levers to relieve roughly $146 billion in student loans. Those efforts include:

• Nearly $46 billion for about 900,000 borrowers through one-time fixes to their income-driven repayment plans.
• About $62.5 billion for up to 872,000 borrowers through Public Service Loan Forgiveness fixes.
• More than $22.5 billion for 1.2 million borrowers who attended predatory or defunct schools.
• Close to $12 billion for several hundred thousand borrowers with disabilities that make it difficult for them to pay off their loans. 

Roughly 4 million borrowers have had student loans forgiven thanks to policies or changes implemented under Biden.