(WASHINGTON) — President Biden is set to announce new student debt forgiveness plans that, combined with actions the administration has already taken, will benefit over 30 million Americans if the plans are finalized, according to the White House.
“Our goal is for the overwhelming majority of things like interest, loans that are older, borrowers who attended programs that didn’t deliver financial value, to do that [cancel debt] automatically,” a senior administration official said.
The president will announce the plans on Monday afternoon during his remarks on lowering costs for Americans in Madison, Wisconsin. To date, the administration has canceled about $146 billion for nearly four million Americans, and these plans could increase the number of recipients to north of 30 million.
The debt forgiveness announcement will aid borrowers with runaway interest who owe more money than they did when repayment started, borrowers who are eligible for one of the president’s existing loan forgiveness programs plans (Public Service Loan Forgiveness, Saving on a Valuable Education, etc.), borrowers who took out undergraduate loans at least 20 years ago or graduate level loans from at least 25 years ago and haven’t had their debt forgiven; borrowers who were taken advantage of by low financial programs or attended schools with high rates of student loan defaults and any borrowers experiencing hardships in their daily lives that make them unable to pay back their loans today or in the future.
This is President Biden’s second wave of debt relief attempts, and it was a key campaign pledge in 2020. Though it maintains its ability to strike debt for tens of millions of Americans, the administration suffered a 6-3 Supreme Court defeat last June. At the time, the Supreme Court struck down the Biden administration’s program to forgive student loan debt for more than 43 million American borrowers.
In the decision, written by Chief Justice John Roberts and read from the bench, the court ruled the Department of Education exceeded its authority when it moved to wipe out more than $400 billion in federal student loan debt. The plan would have completely canceled up to $10,000 for loan recipients making under $125,000 a year and $20,000 for Pell Grant-assisted borrowers. Over 40 million Americans were eligible for the sweeping proposal.
“President Biden will use every tool available to cancel student loan debt for as many borrowers as possible, no matter how many times Republican elected officials try to stand in his way,” White House Press Secretary Karine Jean-Pierre said.
Under the latest plans, senior administration officials said about 25 million borrowers will receive relief for their accrued interest (23 million would see the entirety of their balance growth eliminated), about another two million from forgiveness plans like PSLF, SAVE and others, another roughly two million with loans that are 20+ years old, and more than 10 million borrowers with at least $5,000 in debt relief or more.
An additional population of borrowers experiencing financial hardships will also receive debt cancellation.
Education Secretary Miguel Cardona has the ability to designate provisions for early implementation of these plans, per a senior administration official.
“Student loan forgiveness isn’t only about the relief for today’s borrowers. It’s about social mobility, economic prosperity, and creating an America that lives up to its highest ideals,” Sec. Cardona said.
Meanwhile, senior administration officials do not believe the president’s new plans will contribute to inflation even though the last plan was estimated at $400 billion, according to the nonpartisan Congressional Budget Office (CBO).
“We do feel good about its effect on economic growth and economic mobility, improving the ability of families to really be able to get that breathing room that the President has talked about and that the Secretary has talked about in these sorts of situations,” the senior administration official said.
Monday’s plans, however, can’t officially take place until “early this fall,” according to senior administration officials. The actions will go out for public comment “in the coming months,” the officials said.
Having studied the Supreme Court’s ruling last summer, the officials stressed that Monday’s plans to relieve debt for millions of Americans differ from the president’s first installment.
“The department is proceeding under different legal authority, which is long-standing, and the plans involve different durations by providing targeted relief to borrowers with particular circumstances,” a senior administration official said, adding, “This isn’t the same plan, and we feel confident going forward.”
The announcement comes as a coalition of Republican states sued President Biden, Cardona and the Department of Education for implementing the SAVE student debt repayment plan last month.
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