So far, over 4 million people have gotten student debt cancellation as a result of relief programs and fixes to those programs by the Biden Administration. However, the biggest student debt relief program proposed by the Biden Administration, which would have provided up to $20,000 in debt relief for tens of millions of working and middle class borrowers, was blocked by the Supreme Court last summer.
President Biden Announces New Student Debt Relief Plans that Aim to Provide Debt Relief to 30 Million Americans
On Monday, President Biden announced that the Department of Education was working on new rules that aim to expand some amount of federal student loan debt relief to roughly 30 million Americans. The plan aims to provide relief to:
- Borrowers who have had their balances balloon with interest,
- Borrowers who have been trapped in debt for two decades or more,
- Borrowers have missed out on relief that they are eligible for,
- Borrowers who took out debt for certain low-value or closed programs,
- Borrowers whose financial hardship prevents them from being able to pay back their loans.
Under the proposal, 25 million borrowers who owe more now than they originally borrowed would have some or all of the amount their balance has grown due to interest canceled. These borrowers would not have their full debt canceled, but their debt would be reduced. Other borrowers, including those who entered repayment more than 20 or 25 years ago and those eligible for existing loan cancellation programs but who have been blocked by red tape, would have their debts fully canceled.
After decades of mismanagement of the federal student loan program that has left many borrowers with more debt than when they entered repayment, and has prevented millions from benefiting from loan forgiveness programs that they were eligible for, this proposal to make things right is a breath of fresh air. This proposal is especially important to borrowers who have been the most burdened by the student loan system and its failures. This includes students from low-income families, first-generation college students, students who attended predatory for-profit schools, borrowers with less than a 4-year degree, and Black and Latino borrowers. President Biden’s student debt relief proposal, if implemented, would do tremendous good.
But borrowers should be aware that this is just a proposal and there is no guarantee that they will get the relief proposed. There are still a lot of steps between a proposal and an actionable policy, and, as with the prior debt relief plan, there may be efforts by politicians and interest groups to block the plan before borrowers can benefit.
What should borrowers do?
Because this debt relief plan is just a proposal, and there is no guarantee that it will happen and won’t be blocked by opponents, we encourage borrowers to focus for now on pursuing the debt relief programs currently available. That may include applying for existing loan relief programs you may be eligible for, consolidating into the Direct Loan program to benefit from better relief programs, and figuring out and enrolling in the best loan payment plan for you.
Borrowers can also submit comments on the new debt relief plan rules when they are published. We’ll provide an update here on the blog when that happens.
Finally, consider sharing your story with NCLC to help us make the student loan system better for borrowers. How would this debt relief plan impact you and your family?