The Education Department is proposing to cancel some or all of the outstanding student loans for certain categories of borrowers, including those who have spent more than 25 years in repayment or those who attended career-training programs that didn’t pay off, according to a draft proposal released Monday evening.
The announcement comes after the Biden Administration discharged an additional $9 billion in student loans, which provided relief for 125,000 Americans in October. The new proposal is the first look at specific debt-relief proposals since the Supreme Court struck down President Biden’s plan to forgive up to $20,000 in student loans for Pell Grant recipients and eligible borrowers earning less than $125,000 a year. After the court’s decision, Biden vowed to try again to provide some form of student loan forgiveness.
The scope of relief likely will vary depending on which category a borrower falls in. The proposed categories are:
· Those whose balances have increased beyond what they originally borrowed.
· Borrowers who would be eligible for forgiveness under an income-driven repayment plan and other targeted relief programs but who didn’t apply.
· Borrowers who have been making repayments for 25 years and still have a balance.
· Those who attended a program that would fail the gainful-employment regulation as outlined in the department's new rule that takes effect July 2024, or who went to an institution with high student loan default rates.
The department didn’t provide a specific number of how many people would be affected by the draft plan. Biden’s initial plan would have provided some relief to 43 million borrowers.
The Education Department has been working its way through a complex and lengthy process known as negotiated rule making, which is required when drafting regulations related to federal financial aid. The committee’s meeting next week is the second of three sessions scheduled for this fall, with the goal of reaching consensus on the proposal by the third round of meetings in December.