President Joe Biden is set to announce a new student loan forgiveness plan that could benefit tens of millions of Americans during an event in Madison, Wisconsin. This news comes after the Supreme Court rejected his initial attempt to cancel up to $20,000 in student debt per borrower as unconstitutional. The revised plan will target specific borrowers who are already eligible for debt cancellation under existing government programs, those who have been in repayment for 20 years or longer on undergraduate loans, or attended schools of questionable value, among others.
One aspect of the new plan will focus on canceling runaway interest for millions of borrowers, addressing the issue of high interest rates on federal student loans that can lead to borrowers owing more than they originally borrowed. The Biden administration estimates that borrowers could have up to $20,000 of unpaid interest on federal student debt forgiven, with certain low- and middle-income borrowers potentially having all accrued interest canceled since entering repayment. The plan aims to provide relief to those facing financial hardships such as medical debt or high child care expenses.
To ensure the success and legality of the new plan, the Biden administration is utilizing the Higher Education Act as its legal justification, as opposed to the Heroes Act which was used in the previous attempt. The HEA allows the education secretary some authority to waive or release borrowers’ education debt. By using a more targeted and specific aid program, along with a different legal framework and the rulemaking process, the administration hopes this effort will withstand any legal challenges it may face.
Forgiving student debt is a crucial issue for many voters, with nearly half of respondents in a recent survey stating that canceling student loan debt is important to them in the upcoming elections. This could particularly benefit Biden with younger voters, as the survey found that around 70% of Gen Z respondents consider student debt cancellation an important issue. The new plan is estimated to reach over 30 million borrowers, combined with other ongoing debt forgiveness efforts, with the Biden administration having already cleared the education debts of 4 million people totaling $146 billion.
Providing relief for student loan borrowers has been a priority for President Biden, with this new forgiveness plan reflecting his commitment to ensuring that student debt does not leave borrowers worse off than before they attended college. By targeting specific groups of borrowers and addressing issues such as high interest rates, the plan aims to alleviate the financial burden faced by many Americans. Through legal justification, rulemaking processes, and the support of voters, Biden is forging ahead with efforts to reform the student loan system and provide much-needed relief to millions of borrowers.
