The Biden administration has announced new details on an upcoming student loan forgiveness initiative that may benefit millions of borrowers. The program is expected to launch in the fall and is a second attempt at mass student debt relief after a previous plan was rejected by the Supreme Court last year. The Education Department has been working on finalizing the rules for the program after nearly a year of negotiations.
The latest guidance from the department outlines four categories of borrowers who may qualify for loan forgiveness under the new plan. These include borrowers who have seen their loan balance increase over time due to interest accrual, those who first entered repayment at least 20 or 25 years ago, borrowers who attended low-value institutions, and those who would qualify for relief under other programs but never applied. Eligible borrowers could receive partial or complete forgiveness for their loans.
Borrowers who wish to opt out of the debt relief program must notify their loan servicers by August 30. Opting out of this initiative may also result in being excluded from other student loan forgiveness programs. However, not receiving an email about the program does not necessarily mean a borrower is ineligible. The department is still finalizing the details of the program, and relief will be automatic for qualifying borrowers once regulations are finalized.
While no application will be required for most borrowers to receive loan forgiveness under the new plan, a fifth category based on hardship may require an application. This component is expected to go live sometime next year. The program could face legal challenges that may delay or block relief for borrowers. The department continues to work on finalizing the rules for the program and implementing the new regulations, which are expected to be completed in the fall.
