Latest Updates on Student Loan Forgiveness Plan: One Major Question Remains for Biden’s Panel

After two days of discussions, it is clear that there is no perfect solution to America’s ever-growing problem of college debt. Despite the Department of Education’s efforts to provide targeted relief, some borrowers will inevitably slip through the cracks. This group of negotiators, consisting of individuals with student loan debt, loan servicers, university officials, and others, has one more round of talks to try and come to an agreement on canceling loans for borrowers who have paid for decades, are eligible for relief but haven’t received it, attended low-value programs, or are facing other hardships that make loan repayment impossible.

President Joe Biden’s second attempt at canceling student loan debt is aimed at reaching as many Americans as possible while also withstanding potential legal challenges. This effort is part of the administration’s broader strategy to cancel debt using existing programs and create repayment plans that are based on borrowers’ income. The newest plan, called “Saving on a Valuable Education” (SAVE), has already enrolled nearly 5.5 million people, with 2.9 million having their payments reduced to $0.

However, not all borrowers are eligible for these relief programs. The negotiators have raised concerns about excluding individuals with Parent PLUS loans and preventing income-driven repayment program participants from accessing other forms of relief. They are advocating for simple options for debt forgiveness that can be easily explained. The negotiations are ongoing, and the exact policies favored by the Education Department will be determined in the coming weeks.

Which borrowers could fall through the cracks?

Some concerns were expressed during the negotiations about certain groups of borrowers being left behind. For example, students who attended low-value nonprofit colleges, which are mostly exempt from gainful employment rules, could be overlooked. There are also concerns about older borrowers who may struggle to provide the necessary paperwork, borrowers with disabilities who face challenges in providing documentation, and those experiencing homelessness without a mailing address. The Education Department is working on developing criteria for borrowers facing different forms of hardship, but this task presents its own challenges in avoiding the exclusion of certain groups.

During the negotiations, the importance of considering accrued interest and time spent in default for borrowers with high balances and decades-old loans was emphasized. Several negotiators also raised questions about the start of the repayment timeline and advocated for alternative benchmarks for defining hardship, rather than relying on federal poverty guidelines or bankruptcy standards.

Will loan forgiveness survive the courts? 

The legality of Biden’s student loan forgiveness plan remains a concern. Some argue that the provisions need to be carefully crafted to avoid legal challenges. The negotiations are designed to create a more legally airtight approach compared to the previous plan for up to $20,000 in relief. Legal experts disagree on whether such provisions are within the department’s legal authority. However, many borrowers affected by servicer errors and inaccurate information are hopeful for mass student loan cancellation.

‘Elephant in the room’: Threat of shutdown lingers over talks 

Another major concern hanging over the negotiations is the possibility of a federal government shutdown. The potential shutdown could coincide with the next round of relief talks, causing further uncertainty for borrowers. The Department of Education is preparing for this scenario and assures that it will not leave borrowers hanging.

When is the final student loan relief meeting?

The final session of talks on student loan debt forgiveness is scheduled for December 11-12. The December session will be virtual and open to public comments.

Zachary Schermele is a breaking news and education reporter for USA TODAY. You can reach him by email at zschermele@usatoday.com. Follow him on X at @ZachSchermele.