By SEUNG MIN KIM and COLLIN BINKLEY (Associated Press)
WASHINGTON (AP) — President Joe Biden is set to unveil a new effort to expand student loan relief for different groups of borrowers, nearly a year after the Supreme Court blocked his initial attempt to cancel debt for millions of college attendees.
Biden will reveal the plan on Monday in Madison, Wisconsin, at the University of Wisconsin campus. The specific federal regulations outlining eligibility for reducing or eliminating student loan debt are not expected to be released at that time, according to anonymous sources familiar with the proposal.
Much of the details that Biden will discuss on Monday have already been communicated through a negotiated rulemaking process at the Department of Education, which has been working for months to define the new categories of borrowers. The president announced immediately after the Supreme Court decision that Education Secretary Miguel Cardona would be responsible for the process under the Higher Education Act.
The effort aims to fulfill Biden’s promise after the Supreme Court rejected his initial plan in June. This new announcement on student loan relief, an important issue for younger voters, could help rally parts of Biden’s political support base who have become disheartened by his performance.
The plan that Biden will outline is expected to expand federal student loan relief to specific categories of borrowers through the Higher Education Act, which administration officials believe provides stronger legal support than the broad proposal rejected last year. The planned announcement from Biden was first reported by the Wall Street Journal.
“This new approach is legally sound,” Biden said in June. “It will take longer, but, in my view, it’s the best path available to provide relief for as many borrowers as possible.”
Biden’s latest attempt at cancellation is anticipated to be smaller and more focused than the original plan, which aimed to cancel up to $20,000 in loans for over 40 million borrowers. Details of the new plan have been clarified in recent months as the Education Department presented its ideas to a group of outside negotiators with a stake in higher education.
Through that process, the agency identified five categories of borrowers who would be eligible to have some or all of their federal loans canceled. The plan is focused on assisting those with the greatest need for relief, including many who may otherwise never be able to repay their loans.
Some people who have large amounts of unpaid interest on their loans could have their balances reset to the original amount by getting rid of up to $10,000 or $20,000 in interest, based on their income.
People who have been paying off their student loans for many years could have all remaining debt eliminated under the department’s proposal. Loans for undergraduate education would be forgiven after 20 years of repayment, while other types of federal loans would be forgiven after 25 years.
The plan would automatically cancel loans for those who attended for-profit college programs that were considered “low-value.” Borrowers would qualify for cancellation if the average federal student loan payment among graduates was too high compared to their average salary during their time at the program.
People who qualify for other types of loan cancellation but have not applied would receive relief automatically. This applies to programs like Public Service Loan Forgiveness and Borrower Defense to Repayment, which have been known to involve difficult paperwork.
In response to pressure from advocates, the department has also included a category for those experiencing “hardship.” Borrowers who are highly likely to default within two years would be eligible for cancellation. A broad definition of financial hardship would also open up relief to more borrowers.
A series of hearings to develop the rule concluded in February, and the draft is now being reviewed. The Education Department will need to make a formal proposal and open it for public comment before finalizing the rule.
The latest effort to cancel loans is part of a broader set of initiatives, including those focused on public service workers and low-income borrowers. According to the Biden administration, almost 4 million Americans have had $144 billion in student loans canceled through these efforts.
President Joe Biden is set to announce new categories of borrowers who will receive student loan relief next week, according to three sources familiar with the plans. This comes nearly a year after the Supreme Court thwarted the administration’s initial attempt to cancel debt […]
