President Joe Biden is set to unveil a new initiative aimed at expanding student loan relief for specific categories of borrowers. The announcement, scheduled for next week in Madison, Wisconsin, will introduce federal regulations outlining eligibility criteria for reducing or eliminating student loan debt.
The plan comes nearly a year after the Supreme Court blocked Biden's initial $400 billion proposal to cancel or reduce federal student loan debt, citing the need for congressional approval. Following the court's decision, Biden tasked Education Secretary Miguel Cardona with developing a revised plan under the Higher Education Act.
The upcoming announcement is expected to target new groups of borrowers, including those facing financial hardship, individuals with significantly increased loan balances due to accrued interest, and attendees of college programs deemed 'low-value.'
The revised plan is designed to be more legally sound and targeted compared to the previous proposal. It aims to provide relief to borrowers in greatest need, such as those with ballooning interest payments exceeding their original loan amounts.
Under the proposed plan, borrowers who have been repaying loans for decades could have their remaining debt erased, with specific criteria for undergraduate and other types of federal loans. Additionally, loans used for 'low-value' for-profit college programs would be automatically canceled.
The plan also includes provisions for automatic loan cancellation for eligible borrowers who have not applied for existing relief programs, such as Public Service Loan Forgiveness and Borrower Defense to Repayment.
The Education Department's proposal, developed through a negotiated rulemaking process, is currently under review after a series of hearings concluded in February. Once finalized, the plan will undergo a public comment period before implementation.
In addition to this latest initiative, the Biden administration has already implemented targeted relief programs for public service workers and low-income borrowers, canceling a total of $144 billion in student loans for nearly 4 million Americans.
