Over 800,000 borrowers will benefit from loan cancellations totaling a staggering $39 billion.
In a significant move towards addressing the mounting student debt crisis, the Biden administration has unveiled its latest plan for student debt relief
This announcement follows the recent setback faced by President Biden’s initial student loan forgiveness efforts, which were halted by the Supreme Court just two weeks ago. Those efforts aimed to provide relief to approximately 37 million borrowers. Undeterred, the President expressed determination to employ “every tool” available to advance the student debt relief plan.
Today’s student debt relief plan serves as an adjustment to the existing income-driven repayment scheme. Currently, borrowers are eligible for student debt forgiveness after making payments for either 20 or 25 years, depending on their original arrangement. The administration intends to invoke the 1965 Higher Education Act (HEA) as the legal foundation for their revised plans, following the Supreme Court’s ruling. The Education Department acknowledged the failure of the previous system, attributing it to “administrative failures” that resulted in missed payments and hindered borrowers’ progress toward student debt forgiveness.
Education Secretary Miguel Cardona emphasized the need for reform, stating, “For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness.”
The beneficiaries of this student debt forgiveness plan will receive notifications in the coming days, offering much-needed relief. However, legal challenges may persist despite these efforts. Critics of the relief plans argue that blocking them protects students from taking on additional student debt and prevents colleges from raising tuition fees.
While the first relief effort tied to the pandemic-related Heroes Act faced legal obstacles, the HEA plan proposed by the Biden administration may have a stronger legal foundation, according to Slate. It is crucial, however, for the President to complete the implementation of the new program by the end of 2025 to avoid potential tax burdens associated with student debt relief. As the student debt crisis continues to burden millions of Americans, these developments offer a glimmer of hope for borrowers seeking relief from the overwhelming financial strain caused by their educational loans.