Biden-Harris Administration Advances Rulemaking for Student Loan Debt Relief in Response to Hardship

The Biden-Harris Administration today unveiled fresh proposed regulatory language with a focus on easing the burden of student loan debt for struggling borrowers. Following the Supreme Court’s response to the Administration’s initial student debt relief strategy last summer, President Biden introduced a new approach to offer debt relief to as many borrowers as possible through the Department of Education’s existing rulemaking powers. This text is set for discussion as part of a negotiated rulemaking session scheduled for February 22 and 23.

The proposal outlines a range of criteria that could help identify hardship, including factors like the borrower’s total student loan balance, required payments in relation to household income, and whether the borrower faces high-cost burdens for essential expenses such as healthcare or childcare. The draft stipulates that the U.S. Secretary of Education may take into account these factors and others to assess whether borrowers are undergoing the kind of hardship that would warrant debt relief.

In exercising the Secretary’s authority, the proposed regulatory text would enable automatic relief for borrowers at high risk of default within two years. These borrowers would be pinpointed using a methodology devised by the Secretary based on available information. Besides this relief, the proposed regulations also empower the Secretary to provide additional assistance to borrowers facing hardship through either an application process or an automated mechanism.

“College is designed to pave the way for a better future, but too many students find themselves grappling with insurmountable student debt,” remarked Under Secretary James Kvaal. “The concepts we are presenting today will allow us to aid struggling borrowers amidst personal hardships, aligning with President Biden’s overarching plan to alleviate the financial strain on as many student loan borrowers as possible. It forms a crucial part of the Biden-Harris Administration’s enduring solutions to the issue of unaffordable loans.”

The ongoing regulatory process builds on the Administration’s efforts to rectify existing loan forgiveness initiatives and introduce the SAVE plan, deemed the most cost-effective repayment plan to date. Through this regulatory journey and in line with the comprehensive strategy announced last summer, the Department previously tabled plans for extending debt relief to additional segments of borrowers, including those who:
– Currently carry federal student loan balances surpassing their original borrowed amount.
– Are holders of loans that entered repayment two decades ago.
– Took out loans to enroll in career-training programs that led to excessive debt burdens or inadequate earnings post-graduation, alongside borrowers who attended institutions reporting unacceptably high student loan default rates.
– Qualify for forgiveness under repayment schemes like the SAVE Plan or tailored relief programs, or discharge from closed school loans, yet have not pursued such relief.

**Continuing to Offer Debt Relief and Assistance for Borrowers**

Today’s announcement builds upon the Biden-Harris Administration’s continuous efforts to improve the student loan program and furnish millions of borrowers with much-needed debt relief. This includes the Saving on a Valuable Education (SAVE) plan, benefiting nearly 7 million borrowers by facilitating their monthly loan payments and progress towards forgiveness. Within the SAVE initiative, 3.9 million borrowers enjoy a $0 monthly payment, while others are saving an estimated $117 monthly (equivalent to just over $1,400 annually).

Additionally, the Administration has approved over $136.6 billion in relief for more than 3.7 million borrowers through various measures, including:
– **$45.7 billion for 930,500 borrowers through administrative corrections to IDR payment counts**, narrowing the gap towards forgiveness and addressing concerns about forbearance misuse by loan servicers.
– **$56.7 billion for 793,400 borrowers through PSLF**, encompassing those benefiting from the Administration’s limited PSLF waiver and the regulatory enhancements introduced. Prior to the Biden-Harris Administration’s alterations to PSLF, only about 7,000 borrowers had received forgiveness.
– **$11.7 billion for nearly 513,000 borrowers facing total and permanent disability**.
– **$22.5 billion for over 1.3 million borrowers affected by school misconduct, institutional closures, or settlements following related court cases**.

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