The Biden administration on Tuesday released the draft text of its retooled plan for widespread student loan forgiveness, laying out proposed regulations that could reduce or eliminate debts for millions of borrowers as soon as this fall.
The regulatory proposal is the latest effort by President Joe Biden to deliver on his campaign pledge of canceling student debt after his initial debt relief program was struck down by the Supreme Court last year.
"Today's announcement shows that the Biden-Harris Administration is continuing to fulfill our promises to fix a broken higher education system," said Education Secretary Miguel Cardona. The proposed rules are set for formal publication in the Federal Register on Wednesday, triggering a 30-day public comment period.
Biden's new relief strategy, first outlined last week, aims to forgive unpaid interest for approximately 25 million borrowers whose debt has ballooned due to accumulated interest. It also extends aid to over 4 million individuals who either attended low-quality academic programs or carried loans for two decades or more.
"These distinct forms of debt relief are designed for borrowers struggling with their loans - and that's a lot of people," said Undersecretary James Kvaal. "There are 25 million borrowers whose interest is growing faster than they can pay it down. That fact alone shows how badly President Biden's student loan relief is needed."
While the draft omits details on relief for borrowers facing financial hardship, a second proposal addressing that cohort is promised "in the coming months." If fully implemented as proposed, the administration estimates its plan, coupled with existing debt cancellation initiatives, could assist around 30 million borrowers.
The maneuver represents a strategic reset after the Supreme Court rejected Biden's original attempt to eliminate up to $20,000 in federal student debt for lower- and middle-income borrowers using pandemic-era emergency powers. This revised pitch instead leans on the Education Secretary's authority under the Higher Education Act.
"We're confident that Biden's new attempt is sufficiently different to pass muster before the court," an official told reporters, contrasting it with the Covid-based justification underlying the prior effort.
While proponents praise Biden for persisting, Republican critics like Rep. Virginia Foxx (R-N.C.) denounced the proposal as "reckless and fiscally irresponsible" with "no legal ground to stand upon."
However, the administration asserts addressing soaring student debt is both a moral and economic imperative.
A key pillar is forgiving unpaid interest that has accumulated during repayment periods, potentially providing up to $20,000 in relief per borrower regardless of income. This aims to assist those making payments yet still seeing balances swell.
Furthermore, the plan proposes canceling all remaining debt for undergraduate borrowers making payments for over 20 years, and graduate borrowers paying for over 25 years - addressing those mired in debt for decades.
Relief is also extended to former students of institutions found to have misled students or underdelivered on educational value and outcomes.
As the 30-day comment window opens, the administration aims to finalize the overhaul by fall, marking a pivotal new phase in Biden's quest to reform a system he deems "broken" by alleviating the crushing loan burdens hobbling millions of Americans.
