What to know about Biden’s new student debt relief plan

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By journalsofus.com

Affected groups include:

— Borrowers whose loan balances have ballooned due to interest would have up to $20,000 of their interest balance written off. The plan would waive the entire balance of interest for borrowers considered “low- and middle-income” who are enrolled in the administration’s income-driven repayment plans.

Interest forgiveness would be a one-time benefit, but it would be the plan’s biggest relief valve. The administration estimates that of the 25 million borrowers who could see relief under this exemption, 23 million would have their entire interest balance wiped out.

— Borrowers who are eligible for loan forgiveness but have not yet applied for it under existing programs such as Public Service Loan Forgiveness or the administration’s new repayment program, called SAVE, would have their debts canceled automatically.

— Borrowers with undergraduate student debt who began repaying their loans more than 20 years ago, and graduate students who began repaying their debt 25 or more years ago, would have their debts discharged.

— Borrowers who enrolled in programs or colleges that lost federal funds because they cheated or defrauded students would have their debts forgiven. Students who attended institutions or programs that left them with piles of debt but bleak income or job prospects would also be eligible for relief.

— Borrowers who are experiencing “hardship” repaying their loans due to medical or child care costs would also be eligible for some form of relief. The administration has not yet determined how these borrowers would be identified, but is considering automatic forgiveness for those at risk of default.

Biden initially attempted to provide $400 billion in debt relief to 40 million borrowers using the Higher Education Opportunities for Student Aid Act of 2003, or HEROES Act, which the administration said allowed the government to forgive debt of students during a national emergency like the COVID-19 Pandemic.

The Supreme Court blocked that measuresaying that Biden had exceeded his authority.

The new plan would forgive some or all of the credit debt of nearly 30 million borrowers under the Higher Education Act, the federal law that regulates student loan and grant programs. By focusing on specific groups of borrowers (rather than offering broad loan forgiveness), the administration believes it can act within the narrower confines of that law.

The Biden administration said White House and Department of Education lawyers studied last year’s Supreme Court ruling and designed the new program to make sure it did not violate principles laid out by the justices.

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