Biden unveils draft rule for his latest student debt relief plan

The Education Department unveiled a draft proposal on Tuesday of President Joe Biden’s latest plan to broadly cancel swaths of student loan debt for millions of borrowers.

His plan seeks to forgive unpaid interest for some 25 million Americans who now owe more on their loans than they originally borrowed. It would also help more than 2 million borrowers who’ve carried their debts for decades and another 2 million borrowers who would have qualified for existing federal programs but failed to enroll. Borrowers who attended “low-value programs” could see relief as well.

If implemented, the administration said the plan, along with its other student debt relief efforts, would apply to roughly 30 million borrowers as early as this fall.

“These distinct forms of debt relief are designed for borrowers struggling with their loans — and that’s a lot of people,” Education Undersecretary James Kvaal said in a statement. “There are 25 million borrowers whose interest is growing faster than they can pay it down. That fact alone shows how badly President Biden’s student loan relief is needed.”

Biden first announced the plan last week at a community college in Madison, Wisconsin, while other top administration officials went to other swing states to push his pitch.

The proposal, which provides targeted relief for the majority of student loan borrowers, comes as Biden looks to deliver on his campaign promise to cancel some student loan debt after his more sweeping plan was thwarted by the Supreme Court last year.

Senior administration officials have previously told reporters they’re “confident” that Biden’s new attempt is sufficiently different to pass muster before the court. The plan hinges on the Education secretary’s legal authority under the Higher Education Act, rather than the Covid-related emergency powers that were the basis for the administration’s first plan.

While Democrats and groups in support of debt relief have lauded the Biden administration’s efforts, Rep. Virginia Foxx (R-N.C.), who helms the House education panel, slammed the proposal as a “reckless and fiscally irresponsible" action.

“Mr. President, you have no legal ground to stand upon,” Foxx said. “Your scheme is not steeped in benevolence or goodwill. It is mired in utter contempt for the Supreme Court and every student, family and hardworking taxpayer in this country.”

The proposed rule will be published in the Federal Register on Wednesday with a 30-day comment period, and the department said it is still aiming to finalize its rules by the fall.

A separate draft rule focused on relief for borrowers experiencing hardship is slated for the coming months. It is expected to include proposals to grant automatic forgiveness of loans for borrowers at a high risk of default and others who “show hardship due to other indicators” like high medical and caregiving expenses.

“As President Biden said last week, our Administration is working as quickly as possible to deliver relief to as many borrowers as possible,” a department spokesperson said about the hardship proposal. “As we vigorously continue to develop the NPRM related to hardship for release in the coming months, we also are moving forward with these proposed rules today so we can begin delivering relief to borrowers as early as this fall.”