President Joe Biden has unveiled new plans aimed at canceling or reducing student loan balances for millions of Americans after the Supreme Court struck down his large-scale debt forgiveness attempt last year.
The White House expects the latest proposal, when combined with previous actions taken by the administration, to benefit more than 30 million Americans in total.
The president announced the details of his proposal on April 8 during his trip to Madison, Wisconsin.
“Today, too many Americans, especially young people, are saddled with unsustainable debts in exchange for college degrees,” President Biden said in a speech in Wisconsin.
“The ability for working and middle-class folks to repay their student loans has become so burdensome, a lot can’t repay for even decades after being in school.”
President Biden also met with borrowers in Wisconsin who have benefited from his debt relief efforts.
“If these plans are finalized as proposed, altogether, this administration will begin to cancel up to $20,000 in interest for millions of borrowers and [offer] full loan forgiveness for millions more this fall,” Secretary of Education Miguel Cardona told reporters during a call on April 7.
“That’s on top of the $146 billion in student loan debt relief for 4 million Americans that we’ve already approved,” he said.
According to a fact sheet released by the White House, these plans aim to eliminate accrued interest for 23 million borrowers, cancel the entire student debt for more than 4 million borrowers, and offer debt relief of at least $5,000 or more to more than 10 million borrowers.
In June 2022, the Supreme Court in a 6–3 decision overturned the Biden administration’s original loan forgiveness plan. That proposal aimed to cancel $430 billion in repayments related to student loan debt, which was expected to benefit up to 43 million Americans.
“Some of my Republican friends, elected officials, and special interest sued, and the Supreme Court blocked us. But that didn’t stop us. ... We continue to find alternative paths to reduce student debt,” President Biden said.
“Today, I’m proud to announce five major actions to continue to relieve student debt for more than 30 million Americans.”
If implemented, the new plan would cancel runaway interest for millions of borrowers, as well as debt for borrowers who have been living with their student loans for 20 years or more for undergraduate loans and 25 years or more for graduate loans, according to the White House.
It would also automatically cancel debt for borrowers who qualify for forgiveness programs such as Saving on a Valuable Education, Public Service Loan Forgiveness, and others.
In addition, borrowers who are enrolled in low financial value programs and those who are experiencing difficulties in their everyday lives will also be able to benefit from the loan forgiveness policies in the Biden administration’s budget.
The proposal will be released for public comment in the coming months, and the goal is to begin canceling interest balances for borrowers early this fall, before the election, a senior administration official told reporters during the call.
Despite potential legal challenges, administration officials believe they are on sound legal footing.
“We have studied the Supreme Court’s decision carefully. We intend to pursue these regulations in a way that is entirely consistent with that decision,” the senior administration official said.
The new proposal differs from the administration’s previous debt relief plan and will be implemented using the secretary’s long-standing authority under the Higher Education Act, the official said.
“We’re not concerned about an inflationary effect,” the official said, adding that student debt relief will lead to “economic growth and economic mobility.”
With seven months until the election, President Biden is struggling to attract young voters, a critical group that is gradually leaning toward former President Donald Trump.
