Joe Biden announced plans to cancel student loans for 30 million borrowers on Monday, the administration’s latest push on addressing student debt before the presidential election.
The plan primarily targets borrowers who have accrued a high level of interest on their debt and those who have been in repayment for at least 20 years. Borrowers who face extreme economic hardship could also see some relief.
The White House said that parts of the plan could begin to take effect in the early fall, at the earliest. In addition to a waiting period to receive public comment, the administration is expecting legal challenges from Republicans that could stall the plan from going into effect.
Biden touted the new plan in a speech Monday afternoon in Madison, Wisconsin, where he said “too many people feel the strain and stress” of student loans.
“Today, too many Americans, especially young people, are saddled with unsustainable debts in exchange for a college degree,” Biden said. “It’s a drag on our local economy.
“Now, thanks to what we’re doing, that debt is no longer holding you back.
The bulk of borrowers impacted by the plan will be those who owe more than their original balance because of accumulated interest. Borrowers who make under $120,000 a year, or married borrowers who make under $240,000, will automatically receive cancellation for the amount their balance has grown because of interest, up to $20,000. This cancellation will be automatic, and the administration estimates it will impact more than 25 million borrowers.
The plan also targets borrowers who have held their debt for nearly 20 years. Borrowers who started repayment on their undergraduate debt on or before 1 July 2005 or their graduate school debt on or before 1 July 2000 will see the rest of their loans forgiven. The White House estimates about 2.5 million borrowers would be affected by this.
Borrowers who are facing economic hardship and are at high risk of defaulting on their loans because of economic hardship in their daily lives, for example having medical debt or child care costs, may see their debt automatically cancelled under the plan.
The administration is also trying to automatically enroll borrowers who are qualified for various forgiveness programs, including the Save plan and the Public Service Loan Forgiveness plan, but have not signed up for them. The White House estimates 2 million borrowers who could see their loans forgiven have not signed up for the programs.
If the plan is executed, it would bring the total number of borrowers who have seen debt relief under Biden to 30 million.
Though he had promised to cancel student debt during his 2020 presidential campaign, Biden has been fighting an uphill battle to try to address student debt after the supreme court last year blocked his big plan to cancel some debt for at least 43 million borrowers, including $20,000 in cancellation for some borrowers.
After the supreme court’s decision, the White House’s student debt strategy has been to specifically target groups of borrowers for relief, especially those who have held debt for multiple decades and students who attended predatory for-profit schools.
The White House also launched the Save (Saving on A Valuable Education) plan, a revamped income-driven repayment plan that allows borrowers to be on track for forgiveness if they pay a set portion of their income every month.
Biden on Wednesday noted that “tens of millions of people’s debt was literally about to get cancelled”.
“Then some of my Republican friends, elected officials and special interests sued us, and the supreme court blocked us. But that didn’t stop us,” he said. “I mean it sincerely, we continue to find alternatives past student debt repayments that are not challengeable.”
