The White House reveals draft plans for the upcoming student debt relief plan
Under the proposals, the Education Department would cancel debt owed by borrowers who saw their balances swell beyond what they originally borrowed due to years of accumulating interest. It would also cancel loans that have been in repayment for 25 years or more.
The proposals also call for new student debt relief programs that would provide forgiveness to borrowers who attended institutions that leave students with “unreasonable debt burdens” or have high rates of student loan default. The Education Department also wants to offer automatic loan forgiveness to borrowers who qualify under existing debt relief programs but have not applied.
Robert Gordon, deputy director for economic mobility at the White House Domestic Policy Council, told reporters Monday that the borrower categories are intended to “provide assistance to as many borrowers as possible in the event of a system failure.”
The Department for Education has said it also wants to cancel debts owed by borrowers facing “financial distress”, but has not yet drawn up proposals to set out what that means. Officials said Monday they would hear ideas from the rulemaking committee on how to structure this fifth part of the relief program.
The draft proposals, which will be submitted to a federal rulemaking committee next week, reflect the Biden administration’s strategy of dividing its next student debt relief program into separate groups of borrowers rather than its previous comprehensive program.
It is not yet clear whether the total number of borrowers eligible under the draft proposals is greater or less than the nearly 40 million Americans who are estimated to be eligible for up to $10,000 or $20,000 in debt relief under the program that Biden announced in August 2019. .2022.
After the Supreme Court in July struck down that program, which relied on pandemic-related emergency powers, Biden quickly announced that his administration would craft a new student debt relief program using a different legal authority.
Education Department officials focused on a provision in the Higher Education Act that gives the Secretary of Education the authority to “forgive” federal student loan debt and a separate federal law that governs when agencies can stop collecting debts owed to them.
The Department of Education has not released any data on how many borrowers would be eligible under each of the draft proposals. Biden has directed his administration to provide relief to as many borrowers as quickly as possible.