By Julia DeFoe and Samantha Campion, April 30, 2024
President Joe Biden announced a new draft of rules for his proposed student loan relief plan April 16, aiming to provide borrowers student debt relief and make higher education more accessible for the middle class. Since the start of his presidency, the Biden Administration has advocated for a better student loan system that encourages higher education and benefits borrowers and the economy through a student debt relief plan grounded under the Higher Education Act. The Supreme Court rejected Biden’s first proposal in June 2023 with a 6-3 decision. The $400 million plan offered broad loan forgiveness, relieving up to $20,000 for more than 40 million Americans, but Biden referred to this decision as a mistake. Meanwhile, the Onramp repayment program was introduced as a temporary 12-month period to borrowers who have missed payments or are not able to pay their loans, temporarily removing the threat of default or harm to their credit.
“That will allow Secretary Cardona, who was with me today, to compromise, wave or release loans under certain circumstances,” Biden said in a press conference. “This new path is legally sound. It’s going to take longer, but in my view it’s the best path that remains in providing as many borrowers as possible debt relief.”
Almost a year later, the newest proposal includes nine rules that permit waivers for loan amounts held by the department. The first rule would relieve borrowers of up to $20,000 in interest debt on relief on loan amounts that exceed the amount owed before repayment. While forgiving amounts that were posted after entering repayment for borrowers enrolled in an Income Driven Repayment plan that have an annual income less than $120,000. According to the Department of Education, debt forgiveness is permitted for borrowers with debt on old loans that entered repayment at least 20 years ago for undergrad debt and at least 25 years for graduate debt. “Unfortunately, these proposed programs do not affect our current undergrad students who are relatively new borrowers,” said Jeanette Phillips, the executive director of Financial Aid & Scholarships at CPP. “These efforts are to support students who have been in repayment for 10 or even 20 years, wanting to provide relief to these audiences.”
This plan also relieves debt for borrowers who are deemed eligible for loan relief under payment plans and people who have attended low-financial institutions, while assisting those who are having trouble paying back their loans. “One thing to note is that at this point, the program is only a proposal,” said Charles Conn, associate director of admissions at CPP. “It is still in the public comment period through May 17, and as with the previous proposal, is expected to face a number of legal challenges.”
Biden’s new proposal attempts to undergo the formal rule-making process under the HEA to establish new waivers for specific groups of middle-class borrowers with federal debt. According to the Federal Reserve, in the third quarter of 2023, Americans owed a record high $1.74 trillion in student loan debt.
“I remain optimistic about the forgiveness program, canceled student debt could be life changing for a lot of people in this country,” said political science student Giselle Vogel. “This program encourages Americans to pursue a college degree. Without student loans I wouldn’t be standing here today.”
The Biden Administration has canceled $146 billion in student debt relief through programs like the SAVE plan, cutting undergraduate loan payments in half and blocks balance growth from unpaid interest. Department Chair and professor of political science at Cal Poly Pomona Mario Guerrero, reflected on the most recent update regarding Biden’s student loan debt relief plan.
“At this point I think regular people just view it as almost a fantasy, because it’s been so long and it’s been challenged on such technical terms,” said Guerrero.
He agrees with his take on a previous Poly Post article from fall 2023 that the rollout of this debt relief plan is intentional alongside his campaign for the upcoming presidential election.
A recent study conducted from the Pew Research Center confirmed the majority of younger voters don’t agree with Biden’s foreign policy regarding the Middle East and the Israeli-Hamas War. Considering this, it could be speculated that the timing of the debt relief plan is being used to incentivize those younger voters into opting for Biden.
“A lot of people don’t see eye-to-eye with Biden on his foreign policy there,” said Guerrero. “He really has to try to make inroads in other ways. If this was successful and he was able to forgive a significant amount of debt for potential (young) voters, then in theory young voters would turn out for him.”
To learn more on the updates regarding Biden’s student loan forgiveness plan and eligibility to qualify for debt relief, visit the Federal Student Aid website.
Feature image courtesy of Andrew Caballero-Reynolds | Getty Images