By SEUNG MIN KIM and COLLIN BINKLEY (Associated Press)
WASHINGTON (AP) — President Joe Biden is set to announce his latest effort to expand student loan relief next week for new groups of borrowers, according to three people familiar with the plans. This comes almost a year after the Supreme Court blocked his first attempt to cancel debt for millions of college attendees.
Biden will present the plan on Monday in Madison, Wisconsin, where the main campus of the University of Wisconsin is located. The specific federal regulations outlining who would qualify for reduced or eliminated student loan debt are not expected to be released at that time, said the anonymous sources.
Many of the details that Biden will discuss on Monday have already been communicated through a negotiated rulemaking process at the Department of Education. This process has been ongoing for months to work out the new groups of borrowers. After the Supreme Court decision, the president announced that Education Secretary Miguel Cardona would undertake this process, as he has the power under the Higher Education Act to waive or compromise student loan debt in specific cases.
Still, the effort aims to fulfill Biden’s promise after the Supreme Court rejected his initial plan in June. This $400 billion proposal aimed to cancel or reduce federal student loan debt, but a majority of justices said it required congressional approval. Biden criticized that decision as a “mistake” and “wrong.”
The new announcement on student loan relief, which is important to younger voters, could help reinvigorate parts of Biden’s political coalition that have become disenchanted with his job performance. These are people whose support the president will need to defeat presumptive Republican presidential candidate Donald Trump this year.
The plan that Biden will detail aims to expand federal student loan relief to specific new categories of borrowers through the Higher Education Act, a move that administration officials believe puts it on a stronger legal footing than the broad proposal that was rejected by a 6-3 court majority last year. The Wall Street Journal first reported on Biden's planned announcement.
“This new approach is legally sound,” Biden stated in June. “It will take longer, but, in my view, it’s the best approach remaining to provide relief for as many borrowers as possible.”
Biden’s latest attempt to cancel student loan debt is expected to be smaller and more targeted than his original plan, which would have canceled up to $20,000 in loans for over 40 million borrowers. Details of the new plan have become clearer in recent months as the Education Department presented its ideas to a panel of outside negotiators with a stake in higher education, including students and loan servicers.
“President Biden’s anticipated additional executive action will significantly reduce the burden of student loans for millions of Americans,” Senate Majority Leader Chuck Schumer, D-N.Y., said Friday. “There is always more work to be done to alleviate the burden of student loan debt. And we will not stop until crippling student loan debt is a thing of the past.”
In that way, the agency defined five groups of people who would qualify to have some or all of their federal loans forgiven. The focus is on helping those with the most need for help, including many who might never otherwise pay back their loans.
Included in the plan are people whose unpaid interest has grown larger than the original loan amount. The idea is to reset their balances to the original amount by erasing up to $10,000 or $20,000 in interest, based on their income.
People who have been repaying their student loans for many years would have all remaining debt erased under the department's plan. If the loans were used for undergraduate education, they would be forgiven after 20 years of repayment. For other types of federal loans, it would be 25 years.
The plan would cancel loans automatically for those who attended for-profit college programs considered to have low value. Borrowers would qualify for cancellation if, during their attendance, the average federal student loan payment among graduates was too high compared to their average salary.
Those who qualify for other types of loan forgiveness but have not applied would automatically receive assistance. This would apply to Public Service Loan Forgiveness and Borrower Defense to Repayment, programs that have been available for years but require notoriously difficult paperwork.
Under pressure from advocates, the department also added a category for those experiencing "hardship." It would offer forgiveness to borrowers considered highly likely to default within two years. Additional borrowers would qualify for help under a broad definition of financial hardship.
A series of hearings to create the rule wrapped up in February, and the draft is now under review. Before it can be finalized, the Education Department will need to issue a formal proposal and open it to a public comment period.
The most recent effort to forgive loans adds to other specific initiatives, including those targeting public service workers and low-income borrowers. Through these efforts, the Biden administration claims to have forgiven $144 billion in student loans for nearly 4 million Americans.
