The Biden administration is rolling out a new student loan forgiveness initiative, sending emails to millions of borrowers who may qualify for debt relief under the program. U.S. Secretary of Education Miguel Cardona stated that the administration is committed to delivering student debt relief quickly and efficiently to those who have been failed by the current system. The new program aims to provide relief to a wide range of borrowers who meet certain criteria.
The new student loan forgiveness plan is the result of a year-long process following the Supreme Court’s decision last summer that overturned Biden’s initial attempt at mass debt relief. The Biden administration is taking a different legal approach this time through the Higher Education Act, which allows the Education Department to waive federal student loan obligations. This authority is being expanded to potentially include millions of borrowers in the new forgiveness plan.
Borrowers who have experienced runaway interest, those eligible for other forgiveness programs but have not enrolled, those who have been in repayment for at least 20 or 25 years, and borrowers who enrolled in low-financial-value programs could qualify for relief under the new plan. Up to 25 million people could ultimately benefit from partial or complete student loan forgiveness. Borrowers will have the option to opt-out of the relief if they choose not to participate.
The Education Department will be sending out emails to borrowers this week to inform them of their potential eligibility for student loan forgiveness. While receiving an email does not guarantee relief, it gives borrowers the opportunity to opt-out if they are not interested. The program is expected to go live as early as October, once the rules are finalized. A separate pathway for hardship-based loan forgiveness is also being considered, but is not expected to be finalized until 2025.
Legal challenges are likely to arise as the Biden administration faces opposition to its student loan forgiveness initiatives. The new SAVE plan and regulations governing the Borrower Defense to Repayment program have already been blocked by circuit courts. Officials hope that the new plan will navigate these legal hurdles by using a different legal authority and following the Education Department’s rulemaking process. However, the success of the plan remains uncertain as it moves forward.
