Biden’s Student Loan Repayment Plan Targets Eligibility: Find Out if You Could Qualify

The Biden administration is focusing on an alternative plan to provide student debt relief to millions of Americans.

This plan, introduced after the Supreme Court rejected the president’s original strategy for mass forgiveness, utilizes negotiated rulemaking, also known as “neg reg,” to secure relief.

The Department of Education is currently exploring changes to federal higher education law that would enable more borrowers to have their loans discharged. This plan aims to expand on the forgiveness options already available to certain borrowers, such as income-driven repayment and borrower defense to repayment, which provides debt relief to former students who attended predatory or low-value programs.

As part of this neg reg process, it was determined earlier this month that mass loan forgiveness on the scale of Biden’s original plan would be unlikely. Instead, the department will focus on five specific populations who would benefit from targeted relief. This includes borrowers whose loan balances now exceed the amount they initially borrowed and those who graduated with excessive amounts of debt.

Student loan forgiveness, Plan B: Large-scale student loan debt cancellation likely off the table in President Biden’s new attempt

The Education Department has announced the development of draft regulations for most of these categories. An issue paper has also been released to guide discussions among negotiators for the fifth category, which involves borrowers facing hardships not covered by existing forgiveness options.

The draft text, published by POLITICO, proposes one-time full or partial relief for borrowers whose loan balances exceed the amount originally taken out and for those who have been in “repayment” status for at least 25 years. The document also includes discussion questions for negotiators, such as determining which borrowers would be eligible for the relief based on their outstanding balance.

The proposed rule also outlines that borrowers can become eligible for relief if their program fails the department’s new gainful employment rule. Additionally, the rule defines and increases accountability for low-value programs by assessing how graduates’ debt compares to their income.

Narrower student loan forgiveness plan could still impact many borrowers

President Joe Biden’s original plan would have provided assistance to the majority of the 43.5 million individuals with student loan debt in the country. Administration officials have stated that the proposals shared on Monday would still benefit a significant number of borrowers.

The outlined proposals, which have not yet been made public, will be shared with the committee’s negotiators ahead of their next meeting on November 6th.

“President Biden and I are committed to assisting borrowers who have been let down by our country’s broken and unaffordable student loan system,” said U.S. Secretary of Education Miguel Cardona. “These draft proposals would further build upon the historic $127 billion in loan forgiveness that the Biden-Harris administration has already approved for nearly 3.6 million borrowers. We are working to ensure that student debt does not hinder opportunities or prevent borrowers from reaping the benefits of their higher education.”

However, for advocates and borrowers seeking more, even this amount has been deemed disappointing, failing to fulfill a promise made during Biden’s campaign.

The negotiators have been selected to represent various constituents, including different types of borrowers, higher education institutions, and loan servicers.

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With the assistance of the committee, the department will continue refining the draft rules after the upcoming two-day meeting, which is scheduled for December 11th and 12th. Once officially published next year, the public will have the opportunity to submit written comments.

If the committee fails to reach a consensus on a proposal, the Education Department can develop its own plan.

Those wishing to provide public testimony can do so through this link.

Who might be eligible for student loan forgiveness now?

More specifically, the Education Department has identified the following borrowers who could be affected:

  • Borrowers who have been making loan payments for 25 or more years;
  • Borrowers with federal student loan balances that exceed the amount they originally borrowed due to accruing interest;
  • Borrowers who acquired unreasonable debt from career-training programs or attended colleges with high student loan default rates and inadequate income outcomes;
  • Borrowers who are eligible for income-driven repayment plans, Public Service Loan Forgiveness, or closed school loan discharges, but have not applied for these options; and
  • Borrowers with financial hardships that are currently not addressed by the student loan system. Examples include individuals with chronic illnesses, which was discussed during the committee’s recent meeting.

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