President Joe Biden announced on Monday the introduction of new proposals for student debt forgiveness, which, if finalized, will provide relief to more than 30 million Americans. The White House has stated that these plans, in conjunction with previous measures taken by the administration, aim to alleviate the burden of student debt.
In a bid to win over voters in the battleground state of Wisconsin, President Biden made a significant announcement during his visit to Madison College. He emphasized that the proposed relief measures could have a transformative impact on people’s lives.
“People are burdened by the strain and stress of wondering whether they will be able to marry, have their first child, and start a family. Even if they manage to get by, the weight of crushing debt still looms over them,” stated Biden.
“It’s not just a burden for them,” he stated. “It also hampers our local economies when individuals are unable to purchase a home, establish a small business, or pursue the career they have long aspired for.”
In his quest for reelection against former President Donald Trump, President Biden made an official announcement on Monday. This move is seen as an attempt to gain more support from younger voters.
President Biden is making a second attempt to provide debt relief, fulfilling a key campaign promise from 2020. Despite facing a setback last June with a 6-3 defeat in the U.S. Supreme Court, the administration is determined to help tens of millions of Americans by tackling their debt.
The Biden administration’s program to forgive student loan debt for over 43 million American borrowers was struck down by the Supreme Court. Chief Justice John Roberts, who authored the decision and read it aloud, stated that the Department of Education had exceeded its authority by attempting to eliminate over $400 billion in federal student loan debt.
The proposal aimed to eliminate a maximum of $10,000 in loans for individuals earning less than $125,000 annually and up to $20,000 for those who received Pell Grants. This wide-reaching plan could benefit over 40 million eligible Americans.
“But then, despite our best efforts, some of my Republican friends, elected officials, and special interest groups decided to take legal action against us. Unfortunately, their efforts were successful, and the Supreme Court ultimately put a stop to our plans. However, this setback hasn’t deterred us. We remain committed to finding alternative avenues to alleviate the burden of student debt payments that cannot be challenged in court.”
Biden highlighted the efforts of his administration to address the issues with the Public Service Loan Forgiveness program. This program offers debt relief to individuals in professions such as firefighting, nursing, and teaching after ten years of consistent payments. Additionally, the introduction of the SAVE repayment program has been implemented to further assist borrowers.
If implemented, these new plans could potentially increase the number of recipients to over 30 million, adding to the already canceled $146 billion in debt relief for nearly four million Americans by the administration.
What the new plans will do
The announcement of debt forgiveness will provide assistance to borrowers who are burdened with exorbitant interest rates, resulting in a higher debt amount than when they initially started repaying. This includes borrowers who qualify for existing loan forgiveness programs such as Public Service Loan Forgiveness and Saving on a Valuable Education. Additionally, it encompasses borrowers who obtained undergraduate loans at least 20 years ago or graduate level loans at least 25 years ago, without having their debt forgiven thus far. Furthermore, it encompasses borrowers who have been victims of predatory financial programs or have attended schools with high rates of student loan defaults. Lastly, it extends to borrowers facing various hardships in their daily lives that render them incapable of repaying their loans presently or in the future.
According to senior administration officials, approximately 25 million borrowers will receive relief for their accrued interest under the latest plans. Out of these, 23 million borrowers will have their entire balance growth eliminated. Additionally, around two million borrowers will benefit from forgiveness plans such as PSLF (Public Service Loan Forgiveness), SAVE, and others. Another two million borrowers with loans that are 20+ years old will also receive relief. Furthermore, more than 10 million borrowers with a minimum debt of $5,000 will be provided with debt relief.
Furthermore, there will be debt cancellation extended to an additional population of borrowers who are currently facing financial hardships.
According to a senior administration official, Education Secretary Miguel Cardona has the power to designate provisions for early implementation of these plans.
“According to Secretary Cardona, student loan forgiveness is not just aimed at providing immediate relief for borrowers today. It is also focused on promoting social mobility, driving economic prosperity, and ultimately building a nation that embodies its highest ideals.”
Meanwhile, senior administration officials are confident that the president’s new plans will not fuel inflation, despite the previous estimate of $400 billion by the nonpartisan Congressional Budget Office (CBO).
“We are confident in the positive impact it has on economic growth and mobility, enabling families to attain the much-needed financial relief, as emphasized by the President and the Secretary in similar circumstances,” stated a senior administration official.
Senior administration officials have indicated that Monday’s plans cannot be implemented until “early this fall.” They have also stated that the actions will be open for public comment in the coming months.
After thoroughly analyzing the Supreme Court’s decision last summer, the officials emphasized that the upcoming measures to alleviate debt for millions of Americans will be distinct from the initial installment rolled out by the president.
A senior administration official stated that the department is utilizing an established legal authority to move forward with their plans. They emphasized that the relief offered will be tailored to borrowers with specific circumstances and will vary in duration. The official expressed confidence in the approach, noting that it is not the same plan as before.
Last month, President Biden, Cardona, and the Department of Education faced a lawsuit from a coalition of Republican states over the implementation of the SAVE student debt repayment plan. As a response to this, the announcement has been made.
