WASHINGTON (AP) — President Joe Biden‘s latest student loan cancellation plan is moving forward as a proposed regulation, offering him another opportunity to make good on a campaign promise and energize young voters ahead of the November election.
The Department of Education on Tuesday filed paperwork for a new arrangement that would result in the cancellation Biden announced last week. It must go through another 30-day public comment period and another review before it can be finalized.
It is a more targeted proposal than the one the US Supreme Court rejected last year. The new plan uses a different legal basis and aims to cancel or reduce loans for more than 25 million Americans.
Conservative opponents, who see it as an unfair burden on taxpayers who haven’t attended college, have threatened to challenge it in court.
The Democratic president highlighted the plan last week during a trip to Wisconsin, saying it would provide “life-changing” relief. He outlined five categories of people who would qualify for assistance.
The new paperwork submitted by the Ministry of Education covers four of these categories, while a separate proposal will be submitted later discussing how people facing different types of hardship can get relief.
The broadest category of forgiveness would help borrowers who owe more than they originally borrowed due to runaway interest. It would eliminate up to $20,000 in interest for anyone in that situation, while those with annual incomes of less than $120,000 and enrolled in income-driven repayment plans would have all their interest eliminated with no maximum cap. It would happen automatically.
Another category would cancel loans for people who have been paying off their student loans for at least 20 years, and those who have paid off their student loans in the last 25 years.
It would automatically cancel loans for those who attended colleges or programs considered of low financial value. Borrowers would be eligible for cancellation if they are in a program that provides graduates with an income no better than that of those with a high school diploma, or programs that leave graduates with large amounts of debt compared to their income.
Borrowers who qualify for other federal forgiveness programs but have not applied would also have their loans canceled. Federal education officials would use existing data to identify these people and provide assistance. It’s intended to reach people who don’t know about other programs or are put off by complicated application processes.
The proposal was advanced over the course of several hearings as part of a federal rulemaking process that is gathering advice from outside experts. The plan was developed with the help of students, university officials, government officials, borrower advocates and loan servicers.
During that process, advocates pushed for a fifth category of forgiveness for people who suffer various types of hardships that prevent them from repaying their loans. The Department of Education said it is still working on the details of that rule, with a separate proposal “in the coming months.”
The department said the hardship proposal will provide cancellation to borrowers who are at high risk of defaulting on their loans, along with those facing other hardships, including high medical and healthcare costs. That proposal will reflect the proposal agreed upon by outside experts during the rulemaking process, the agency said.
It typically takes months for a proposed rule to be finalized, and months more before it can go into effect. The Biden administration said it plans to implement some parts of the new proposal as early as this fall, using the education secretary’s authority to implement rules early in certain cases.
Republicans strongly oppose a broad elimination of student loans, saying it is an unfair bailout for people who have gone to college.
“Where is the relief for the man who didn’t go to college but works to pay off the loan on the truck he takes to work?” said Sen. Bill Cassidy, R-La., the ranking member of the Senate Health, Education, Labor and Pensions Committee. “What about the woman who paid off her student loans but is now struggling to pay her mortgage? Instead, the Biden administration is putting the bill for someone else’s student debt on these Americans.
Two coalitions of Republican states have sued the Biden administration to block a separate repayment plan that provides an accelerated path to loan forgiveness.
The White House says it is confident the new plan has a solid legal basis, saying the Higher Education Act gives the education secretary the authority to waive student loans in certain cases.
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