In a significant move to address the burden of student debt in the United States, the Biden administration has unveiled a new plan to forgive $39 billion in student loans. The announcement comes as the administration seeks alternatives to a $400 billion student loan forgiveness plan that was previously struck down by the Supreme Court in June.
The Department of Education’s new plan aims to provide relief to more than 800,000 borrowers who have been struggling to repay their student loans. The change in the forgiveness program involves updating a technical requirement under an existing program, allowing more payments to count towards the forgiveness threshold.
Under the new plan, struggling borrowers will have more of their payments counted towards a forgiveness program that takes effect after making the equivalent of either 20 or 25 years’ worth of payments. This adjustment is expected to ensure that borrowers who have faithfully made payments towards their loans for many years will finally be able to achieve debt relief.
Education Secretary Miguel Cardona expressed his commitment to rectifying the shortcomings of the current system, stating, “For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness.” The move is seen as a critical step in providing a lifeline to those who have been facing financial hardships due to their student loans.
It’s important to note that this plan focuses on income-driven repayment plans, which allow borrowers to make smaller payments based on their income. This is distinct from President Joe Biden’s broader attempts to alleviate student debt, which totals well over $1 trillion.
Although the Supreme Court blocked the previous $400 billion loan forgiveness proposal, the Biden administration has already discharged $72 billion in targeted loans, primarily benefiting students whose for-profit schools closed down.
Under the new plan, the Education Department will begin notifying eligible borrowers, and the identification process will continue on a monthly basis until the next year. Discharges of forgiven loans will commence within 30 days after borrowers receive email notifications.
Following the Supreme Court’s decision, President Biden expressed his determination to pursue another mass debt forgiveness plan, exploring a different legal rationale. However, this new program aims to tackle the existing flaws in the system and provide much-needed relief to a significant number of borrowers.
While the move has been welcomed by many advocates for student loan reform, some critics, including Representative Virginia Foxx, have opposed the plan, describing it as “illegal” and “shameful.”
The new student debt forgiveness plan is a step towards easing the financial burden on millions of Americans who have been grappling with the weight of their student loans. As the Education Department implements this program, it is hoped that it will bring much-needed relief to those who have been struggling to manage their student debt, paving the way for a more sustainable and accessible higher education system in the future.
Sources By Agencies