President Biden announced the cancellation of $7.4 billion in student loan debt on Friday. Some speculate that the move is aimed at garnering support from young voters struggling with the burden of rising education costs.
This decision comes during ongoing efforts by the White House to address student debt, following the Supreme Court’s rejection of a broader debt forgiveness plan.
The latest relief targets specific groups such as those enrolled in income-driven repayment plans and public service workers.
Until recently, the Biden administration has forgiven $153 billion in debt for 4.3 million student loan borrowers. The move has drawn criticism from Republicans who argue against its fairness to borrowers who managed to repay their loans independently.
The new proposal seeks to alleviate debt for 25 million borrowers, potentially erasing it for over four million individuals. However, this plan faces hurdles including a public comment period and potential legal challenges, distinguishing it from previous initiatives overturned by the Supreme Court.
According to the New York Times, “10 million borrowers would see debt relief of $5,000 or more.”
Who does this new plan benefit?
The relief plan targets:
- Borrowers facing high interest, potentially canceling up to $20,000 in interest for low and middle-income earners on income-driven plans.
- Automatic debt cancellation for eligible borrowers not yet applying for forgiveness programs.
- Debt cancellation for borrowers with long-standing repayment histories.
- Forgiveness for students affected by fraudulent institutions or poor job prospects.
- Assistance for borrowers struggling with medical or childcare costs, with details still pending.
How is this plan different from the last?
Initially, President Biden aimed to provide $400 billion in debt relief for 40 million borrowers using the HEROES Act, arguing it permitted debt waiver during national emergencies like the pandemic. However, the Supreme Court rejected this, stating Biden had overstepped his authority.
The new plan seeks to forgive some or all loan debt for 25 million borrowers under the Higher Education Act, which regulates student loan programs. By focusing on specific borrower groups, the administration aims to work within the law’s narrower boundaries.
The Biden administration, after studying last year’s Supreme Court ruling, designed the new program to align with the court’s principles. However, questions may arise regarding whether the plan adheres to the Higher Education Act’s requirements or if it surpasses the administration’s authority once again.
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