(BrightPress.org) – President Joe Biden is taking another swing at student loan forgiveness. The administration believes this attempt will be more successful because there is a more targeted approach involved than Biden’s previous attempt at widespread cancellation that the Supreme Court blocked.
Biden announced his new plan on Monday, April 8th in Wisconsin. Instead of widespread debt relief for all borrowers, the new plan targets specific categories of borrowers. Under the new plan, borrowers who owe more than they originally borrowed due to unpaid interest will have the interest waived or “reset” up to $20,000 for borrowers making more than $120,000 per year. There is no cap for borrowers making less than $120,000 per year and are enrolled in an income-driven repayment plan.
Borrowers who have been paying on graduate debt for more than 20 years or undergraduate debt for more than 25 years would have all federal student loan debt canceled. If borrowers are currently eligible for loan forgiveness programs but have not enrolled due to “paperwork requirements, bad advice or other obstacles” they would be eligible for loan forgiveness. Borrowers who left college with degrees of “low financial value” and students who attended and left colleges that either lost the ability to get federal funds or defrauded students, would also become eligible for debt forgiveness.
Borrowers that fall into these categories would not need to apply for debt forgiveness. The cancellation would happen automatically in most cases. Borrowers who would like to claim financial hardship due to child care or medical expenses, for example, would need to apply to have their debt forgiven.
According to the Education Department, if the new rule is finalized, it wouldn’t take effect until July 2025, but the Higher Education Act authorizes action to “fast-track” implementation in some cases, which could result in some debt cancellation beginning later in 2024.
It is expected that Republicans will challenge this new plan. Student loan forgiveness is seen as unfair to taxpayers who have either already paid off their student debt or never attended college.
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