National: Biden Announces New Student Debt Relief Proposal

The Biden administration announced a new student debt relief proposal yesterday that has the potential to impact nearly 30 million borrowers. Over 43 million Americans owe a collective $1.6T in federal student loans.

The proposal, if approved, would cancel up to $20K in interest for roughly 25 million Americans who have exceeded the amount they initially borrowed. Single borrowers earning $120K or less and married couples earning $240K or less, who are enrolled in an income-driven repayment plan, could apply to have their accrued interest since entering repayment forgiven. The initiative also targets those with high-interest debts, individuals holding loans for at least 20 to 25 years, attendees of programs with high debt-to-earnings ratios, and those who qualify for existing relief programs who haven’t applied.

The announcement follows the Supreme Court’s rejection of the administration’s $400B attempt to cancel student debt last summer. This latest plan adopts a more targeted approach and relies on the 1965 Higher Education Act, which allows the secretary of education to “compromise, waive, or release” federal student loans. Implementation is projected for the fall; however, legal challenges are expected.