Biden rolls out major new student debt forgiveness plan

The Biden administration is rolling out a comprehensive new student loan forgiveness plan to follow last year’s Supreme Court rejection of his original effort, hoping to have it in place by the November election.

The new plan contains several elements, including the idea that it would cancel up to $20,000 (£16,000) of each borrower’s accumulated interest on their federal government education loans.

It also aims to help the large number of borrowers who already are technically eligible for some existing governmental forgiveness programmes – such as public service workers and victims of misleading for-profit colleges – but are struggling with the complicated enrolment hurdles, by automatically cancelling their debts.

In a sign of the administration’s commitment to the effort, and its potential political stakes, Mr Biden and top administration officials – including vice-president Kamala Harris and education secretary Miguel Cardona – plan to personally lead in-person events around the country to highlight the initiative.

“We’re continuing to fulfil our promises,” Dr Cardona told reporters ahead of the top-tier road trips.

Mr Biden made student debt relief a clear commitment of his 2020 presidential campaign. His 2022 implementation slashed more than $300 billion in debt for more than 43 million borrowers due to get per-person reductions ranging from $10,000 to $20,000. But the Supreme Court and its majority of conservative justices threw out that plan last year, calling it an impermissibly broad use of the president’s legal right to grant selective forgiveness.

Administration officials said the new plan coming out this week, which has been in the works for the past year, was based on a careful reading of the court’s ruling and the legal openings they see it as allowing.

In addition to describing the relief this time as generally limited to the accumulated interest rather the principal of the loans, Mr Biden is pursuing his new plan through the regulatory process – a well-established but months-long pathway for putting precise and binding definitions on the terms of laws written by Congress.

Biden officials expressed confidence that the method still allows enough time – even with the expected persistence of legal challenges by Republicans – for the administration to begin lopping off loan debts by the time Americans start casting ballots in November.

Some 40 million Americans are estimated to owe about $1.7 trillion from their time in college. So far, with smaller targeted relief efforts that have largely escaped legal challenge, Mr Biden has waived about $145 billion for 4 million borrowers, by far a record for any presidential administration.

And even there, coordinated challenges are arriving. About a dozen Republican-led states joined forces last month to file suit against a Biden plan outlined in October that would offer millions of borrowers lower monthly payments and accelerated cancellation options.

The bigger new plan would bring the total number of beneficiaries to more than 30 million borrowers. Administration officials, in their summaries of the plan, did not offer a corresponding estimate of the dollar value.

The saga of US student loan debt is replete with stories of borrowers stuck for years owing far more than they borrowed. A 2021 study by the Centre for Responsible Lending and the National Consumer Law Centre, looking at data for one major loan servicing company, found large majorities of borrowers paying back student loans yet still seeing their balances growing.

There are also complicated debates over how to handle the problem. Republicans have described loan forgiveness as tantamount to taxpayers without college experience subsidising those who attended. And even some on the political left have raised questions of equity in the distribution of loan cancellation and in the possible encouragement of more borrowing.

The White House, however, has made repeatedly clear its belief in student loan forgiveness as good policy and good politics, largely shown to benefit the neediest Americans.

“President Biden will use every tool available to cancel student loan debt for as many borrowers as possible,” the White House press secretary, Karine Jean-Pierre, told reporters, “no matter how many times Republican elected officials try to stand in his way.”

paul.basken@timeshighereducation.com