President Joe Biden's latest student loan cancellation plan is being advanced as a regulatory proposal, giving him another chance to fulfill a campaign promise and energize young voters ahead of November's election.
The Education Department on Tuesday filed paperwork for new regulations that would implement the cancellations Biden announced last week. A 30-day public comment period and another review will be required before a final decision is made.
This is a more targeted proposal than the one rejected by the U.S. Supreme Court last year. The new plan aims to cancel or reduce the loans of more than 25 million Americans using a different legal basis.
Conservative opponents believe it is an unfair burden on taxpayers who did not attend college and are threatening to challenge it in court.
The Democratic president highlighted the plan during a visit to Wisconsin last week, saying it would bring “life-changing” relief. He divided people eligible for assistance into five categories:
New documents submitted by the Department of Education include four of these categories, but details on how people facing different types of hardship can receive relief will be announced at a later date. Another proposal will be submitted.
The broadest category of forgiveness would help borrowers who owe more than they originally borrowed due to runaway interest. Anyone in this situation can have up to $20,000 in interest waived, while anyone with an annual income of $120,000 or less and on an income-driven repayment plan can get all interest waived with no cap. Ru. It will be done automatically.
Another category would cancel loans for people who have repaid their undergraduate student loans for at least 20 years and those who have repaid their graduate school loans for the past 25 years.
Loans for people who attended universities or programs considered to have low economic value would be automatically canceled. For example, borrowers who participate in programs where graduates earn no more than a high school graduate or who leave a program that leaves them with a large amount of debt relative to their graduates' earnings are subject to cancellation.
Borrowers who qualify for other federal forgiveness programs but don't apply will also have their loans erased. Federal education officials will use existing data to identify these people and provide relief. This is aimed at reaching people who don't know about other programs or who may have been put off by the complex application process.
The proposal was developed through several public hearings as part of a federal regulatory process that gathered advice from outside experts. The plan was drafted in collaboration with students, university officials, state officials, borrower advocates, and loan servicers.
In the process, advocates called for a fifth category of forgiveness for people with various types of hardship who are unable to repay their loans. The Department of Education said the details of its rules were still being worked out and another proposal would be submitted “in the coming months.”
The department said the hardship proposal provides cancellation to borrowers who are at high risk of defaulting on their loans, along with those facing other hardships such as high medical and long-term care costs. The agency said its proposal would reflect what outside experts agreed to during the rulemaking process.
Proposed rules typically take several months to be finalized and several more months to go into effect. The Biden administration said it plans to begin implementing some of the new proposals as early as this fall, leveraging the education secretary's authority to implement rules early in certain cases.
Republicans staunchly oppose widespread student loan cancellation, calling it an unfair relief to those who went to college.
“Where is the help for the guy who didn't go to college but works in a commuter truck to pay off his loans?” said Bill, ranking member of the Senate Health, Education, Labor and Pensions Committee. Sen. Cassidy (R-Louisiana) said: “What about the women who paid off their student loans but are now struggling to pay their mortgages? Instead, the Biden administration is shoehorning someone else’s student loan bill onto these Americans.
A coalition of two Republican states has sued the Biden administration to block another repayment plan that would have accelerated loan forgiveness.
The White House said it believed the new plan was on solid legal footing, noting that the Higher Education Act gives the secretary of education the authority to forgive student loans in certain cases.
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