The Department of Education has released its first draft rules for President Biden’s plan to alleviate the student loan debt of millions of borrowers, with a separate rule aimed at forgiveness for those facing financial hardship to be proposed in the near future. The draft includes nine proposed rules that closely follow the announcement of the new forgiveness plan, with provisions for canceling accrued interest, eliminating debt for long-term borrowers, and offering different avenues of debt cancellation for eligible borrowers. The plan also includes forgiveness for borrowers who took out commercial loans under the FFEL Program and began repayment before July 1, 2000.
The separate rule for borrowers experiencing financial hardship will include proposals for automatic forgiveness for those at risk of future default, as well as relief for borrowers facing other financial challenges such as medical and caregiving expenses. The draft rules will be open for public comment for 30 days after being published in the Federal Register. If implemented as proposed, the rules could provide relief for more than 30 million borrowers, totaling $153 billion in forgiven student loan debt. The most recent round of forgiveness announced by the Biden administration amounted to $7.4 billion.
President Biden’s original plan for widespread student loan forgiveness was struck down by the Supreme Court last August, leading the administration to shift focus to using the Higher Education Act for relief measures. Since then, incremental debt cancellations and the launch of the SAVE plan have been announced. However, several Republican-led states have filed lawsuits against the SAVE plan, accusing the president of trying to impose costly and controversial policies without congressional approval. The lawsuits add to the legal challenges already facing the administration’s efforts to provide relief for student loan borrowers.
Overall, the Biden administration’s efforts to address the student loan debt crisis have faced legal challenges and opposition from Republican-led states. Despite setbacks, the Department of Education continues to work on new plans for debt relief, with the latest draft rules offering hope for more than 30 million borrowers in need of assistance. The public comment period for the proposed rules will provide an opportunity for stakeholders to weigh in on the potential impact of the forgiveness plan, as the administration works towards implementing measures to alleviate the burden of student loan debt on millions of Americans.
