BIDEN TO UNVEIL NEW STUDENT LOAN PLAN
WASHINGTON — President Joe Biden will announce his latest effort to broaden student loan relief next week for new categories of borrowers, according to three people familiar with the plans, nearly a year after the Supreme Court foiled his administration’s first attempt to cancel debt for millions who attended college.
Biden will detail the plan Monday in Madison, Wisconsin.
The effort seeks to make good on Biden’s promise after the Supreme Court struck down his initial plan in June, a $400 billion proposal to cancel or reduce federal student loan debt that a majority of justices said required congressional approval. Biden called that decision a “mistake” and “wrong.”
And the fresh announcement on student loan relief, a vital issue for younger voters, could help energize parts of Biden’s political coalition who have become disillusioned over his job performance — people whose support the president will need to defeat presumptive Republican presidential candidate Donald Trump this year.
The plan that Biden will detail is set to expand federal student loan relief to new yet-targeted categories of borrowers through the Higher Education Act, which administration officials believe puts it on a stronger legal footing than the sweeping proposal that was killed by a 6-3 court majority last year.
Biden’s latest attempt at cancellation is expected to be smaller and more targeted than his original plan, which would have canceled up to $20,000 in loans for more than 40 million borrowers. Details of the new plan have come into focus in recent months as the Education Department brought its ideas to a panel of outside negotiators with an interest in higher education, ranging from students to loan servicers.
Among those targeted for help are individuals whose unpaid interest has snowballed beyond the size of the original loan. The proposal would reset their balances back to the initial balance by erasing up to $10,000 or $20,000 in interest, depending on a borrower’s income.
Borrowers paying down their student loans for decades would get all remaining debt erased under the department’s plan. Loans used for a borrower’s undergraduate education would be canceled if they had been in repayment for at least 20 years. For other types of federal loans, it’s 25 years.
The plan would automatically cancel loans for those who went to for-profit college programs deemed “low-value.” Borrowers would be eligible for cancellation if, while they attended the program, the average federal student loan payment among graduates was too high compared to their average salary.