Biden admin unveils new student loan debt relief proposal for borrowers facing unspecified 'financial hardships'

 February 16, 2024

President Joe Biden's initial broad plans to cancel hundreds of billions of dollars in outstanding student loan debts for millions of borrowers was blocked last year by the Supreme Court, but that hasn't stopped the Biden administration from continuing its efforts to forgive massive amounts of student loan debt through other smaller and more targeted programs.

The Biden administration on Thursday unveiled yet another student loan debt relief proposal under consideration that is purportedly aimed at borrowers experiencing financial hardship, the Washington Examiner reported.

Very few specific details have been released thus far, such as an estimated total of forgiven debt or eligibility thresholds for borrowers, as the proposed rule is reportedly still being internally debated and will undergo a public comment period, both of which could result in changes before it takes effect.

Relief targeted toward borrowers facing "financial hardships"

The Examiner reported that Department of Education Undersecretary James Kvaal announced the new student loan debt relief proposal in a statement on Thursday and said, "College is meant to lead to a better life, but too many students end up struggling due to their student debt."

"The ideas we are outlining today will allow us to help struggling borrowers who are experiencing hardships in their lives, and they are part of President Biden’s overall plan to give breathing room to as many student loan borrowers as possible," he added. "It’s an important part of the Biden-Harris Administration’s permanent solutions to the problem of unaffordable loans."

The Associated Press reported that the proposal targets several different categories of borrowers who could be granted relief under the new rule, with the primary benefactors being those who are facing some sort of financial hardship that makes loan repayment difficult.

There are a wide range of factors that would be considered to determine if a borrower is facing hardship, but the language of the proposal is "expansive" and vague and ultimately leaves it up to the Education secretary to make a final determination on what will constitute eligibility for relief.

Other provisions within the new proposal

The AP report noted that some of the other categories of proposed relief for student loan borrowers with outstanding debt include a reset of the loan back to its original amount to cancel accrued interest by up to $10,000 or $20,000 for individual or married borrowers, respectively.

Another provision would potentially cancel up to the entirety of a remaining balance if the student loan was older than 20 or 25 years, depending upon the type of loan received.

The plan would also cover borrowers who attended a "low-value program" and now find themselves unable to afford loan repayments, and would spread awareness about other pre-existing and targeted loan forgiveness programs that borrowers may be unaware of, such as relief for those who worked in public service or who attended a school that has since been closed and decertified.

More than $136 billion in student loan debt forgiven by Biden admin thus far

The unveiling of this new plan comes less than a month after the Education Department announced that it had just approved student loan debt relief of approximately $4.9 billion for more than 73,000 borrowers under the income-driven repayment (IDR) forgiveness and Public Service Loan Forgiveness (PSLF) programs.

The administration bragged at that time that the new approvals raised the total relief granted thus far since Biden took office to more than $136.6 billion for more than 3.7 million borrowers.

Education Sec. Miguel Cardona said in that announcement last month, "The Biden-Harris Administration has worked relentlessly to fix our country's broken student loan system and address the needless hurdles and administrative inaccuracies that, in the past, kept borrowers from getting the student debt forgiveness they deserved."

"The nearly $5 billion in additional debt relief announced today will go to teachers, social workers, and other public servants whose service to our communities have earned them Public Service Loan Forgiveness, as well as borrowers qualifying for income-driven repayment forgiveness because their payments are for the first time being accurately accounted for," he added. "Thanks to President Biden's leadership, we're approving this loan forgiveness while moving full speed ahead in our efforts to deliver even greater debt relief, and help more borrowers get on a faster track to loan forgiveness under our new, affordable SAVE repayment plan."

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