Topline
The Department of Education unveiled its first draft rules Tuesday of President Joe Biden’s newest plan to shrink the balances of millions of federal student loan borrowers, with a separate rule aimed at forgiveness for borrowers experiencing financial hardship set to be proposed “in the coming months.”
The plan is among Biden’s broadest yet for student debt relief.
Key Facts
The first draft includes nine proposed rules that closely follow the April 8 announcement of the new forgiveness plan, including two separate provisions on canceling accrued interest, eliminating debt for borrowers who began making payments at least 20 years ago and different avenues of debt cancellation for borrowers eligible under various forgiveness plans—such as the Saving on a Valuable Education (SAVE) plan—who have not successfully applied “due to paperwork requirements, bad advice, or other obstacles.”
Additionally, the department proposed forgiveness for borrowers who took out a commercial loan under the Federal Family Education Loan (FFEL) Program, which ended in 2010, and began making payments on or before July 1, 2000.
The separate rule for borrowers experiencing hardship will include “proposals to authorize the automatic forgiveness of loans for borrowers at a high risk of future default,” according to a press release, and will also cover borrowers indicating hardship for reasons other than student loans, including “high medical and caregiving expenses.”
Tuesday’s draft will be published in the Federal Register on Wednesday, which will open a 30-day public comment period as part of the federal rule-making process.
If the rules—including the yet-to-be-released plan for those experiencing financial hardship—are implemented as proposed, it would bring the total number of borrowers granted relief by the administration to more than 30 million, according to the release.
Big Number
$153 billion. That’s the total amount of student loan debt the Biden administration has forgiven, according to the release. The most recent round of forgiveness, announced Friday, totaled $7.4 billion.
Key Background
Biden’s attempt at a long-promised widespread forgiveness plan was unveiled in 2022 and would have provided individual borrowers whose incomes fell below $125,000 with up to $20,000 in relief. In total, the plan would have provided relief for 43 million people, according to Under Secretary of Education James Kvaal. However, it was ultimately struck down by the Supreme Court last August following a series of legal challenges. Following this, Biden announced the administration would turn its efforts to use the 1960s-era Higher Education Act to give borrowers relief, and began working on a new plan. A number of other actions for relief have since been announced, including incremental debt cancellations and the launch of the SAVE plan.
Tangent
Seven states—Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio and Oklahoma—filed a lawsuit on April 9 against Biden, Secretary of Education Miguel Cardona and the Department of Education over the SAVE plan. The lawsuit, spearheaded by Missouri Attorney General Andrew Bailey, alleges the president is “unilaterally trying to impose an extraordinarily expensive and controversial policy that he could not get through Congress” through the program. The lawsuit follows a separate suit over the same forgiveness program filed by 11 states in late March.
Further Reading
Biden Announces New Mass Student Loan Relief Proposal For More Than 30 Million People (Forbes)
Biden Cancels Another $7.4 Billion In Student Debt—Here’s Who’s Affected (Forbes)
More Republican states sue to block Biden’s student loan repayment plan (The Associated Press)
Republican states file lawsuit challenging Biden’s student loan repayment plan (The Associated Press)
