By SEUNG MIN KIM (Associated Press)
WASHINGTON (AP) — President Joe Biden is about to announce his latest effort to expand student loan relief next week for new groups of borrowers, according to three sources familiar with the plans, nearly a year after the Supreme Court thwarted his administration’s initial attempt to forgive debt for millions who went to college.
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 to have their student loan debt reduced or eliminated are not expected to be released then, said the sources, who were granted anonymity to discuss a proposal not yet made public.
Most of the details that Biden will talk about on Monday have already been communicated through a negotiated rulemaking process at the Department of Education, which has been working for months to figure out the new groups of borrowers. The president announced immediately after the Supreme Court decision that Education Secretary Miguel Cardona would undertake the process because he would have the power, under the Higher Education Act, to waive or compromise student loan debt in specific cases.
However, the effort aims to fulfill Biden’s promise after the Supreme Court rejected his initial plan in June, a $400 billion proposal to cancel or reduce federal student loan debt that a majority of justices insisted needed congressional approval. Biden called that decision a “mistake” and “wrong.”
And the fresh announcement on student loan relief, a crucial issue for younger voters, could help rally parts of Biden’s political coalition who have become disenchanted 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 reveal would extend federal student loan relief to new, targeted groups of borrowers through the Higher Education Act, which administration officials believe puts it on a firmer legal footing than the broad proposal that was rejected by a 6-3 court majority last year. The planned announcement from Biden was first reported by the Wall Street Journal.
One of the groups of people expected to qualify under the new proposal is those with financial hardship, the sources said. Another group is likely to include borrowers whose student loan balances have grown significantly due to accrued interest and they now owe more than they initially borrowed. Another potential group would relieve debt for borrowers who attended college programs that are considered “low-value.”
“This new approach is legally sound,” Biden said then. “It’s going to take longer, but, in my view, it’s the best path that remains to providing for as many borrowers as possible with debt relief.”
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.
The agency outlined five groups of borrowers eligible to have some or all of their federal loans forgiven as a way to help those in the greatest need, including many who might never otherwise repay their loans.
The proposal aims to help those whose unpaid interest has grown larger than the original loan amount reset to the initial balance by erasing up to $10,000 or $20,000 in interest, depending on a borrower’s income.
Under the department’s plan, borrowers paying down their student loans for decades would have all remaining debt erased. Loans used for a borrower’s undergraduate education would be canceled after 20 years of repayment, while other federal loans would qualify after 25 years.
The plan would cancel loans automatically for those who attended for-profit college programs considered “low-value.” Borrowers would be eligible for cancellation if the average federal student loan payment among graduates was too high compared to their average salary.
People eligible for other types of cancellation but haven’t applied would get relief automatically. This includes Public Service Loan Forgiveness and Borrower Defense to Repayment, which involve notoriously difficult paperwork.
Under pressure from advocates, the department also added a category for those facing “hardship.” It would offer cancellation to borrowers considered highly likely to be in default within two years, as well as other borrowers experiencing financial hardship.
A series of hearings to craft the rule concluded in February, and the draft is now under review. Before finalization, the Education Department would need to issue a formal proposal and open it to a public comment period.
The most recent attempt at cancellation is part of other specific efforts, including those targeted at public service workers and low-income borrowers. The Biden administration states it has canceled $144 billion in student loans for nearly 4 million Americans through these endeavors.
