STATEN ISLAND, N.Y. — The federal government is proposing a new plan to provide up to $20,000 in financial relief to student loan borrowers.
The Biden-Harris administration — which has already approved a total of $127 billion in student debt forgiveness for 3.6 million borrowers — has unveiled a new proposal to help borrowers experiencing financial hardship.
The latest efforts are part of a plan to use the Higher Education Act of 1965 to cancel student loan debt. Negotiations on the proposal are set for this month, and then the U.S. Department of Education will start to work on draft rules that will be released to the public in early 2024.
“Student loans are supposed to be a bridge to a better life, not a life sentence of endless debt,” said U.S. Secretary of Education Miguel Cardona. “This rule-making process is about standing up for borrowers who’ve been failed by the country’s broken student loan system and creating new regulations that will reduce the burden of student debt in this country.”
Under the new plan, here’s who would be covered:
Borrowers whose balances are greater than what they owed upon entering repayment.
This would provide up to $10,000 in relief to all borrowers who have experienced balance growth due to interest. In some cases, low-income borrowers could see up to $20,000 in debt relief, as well as borrowers enrolled in the Saving on a Valuable Education (SAVE) plan.
Borrowers whose loans first entered repayment many years ago.
This would provide one-time relief 20 years after entering repayment for borrowers with only undergraduate loans. All other borrowers would receive forgiveness on loans that entered repayment 25 years ago.
Borrowers who are eligible for existing loan repayment programs but have not yet applied for such relief.
This includes borrowers eligible for income-driven repayment plans or discharge opportunities, such as Public Service Loan Forgiveness. It would provide borrowers with the benefits they have earned…
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