Biden has new plan to slash student loan interest, debts. What that means for Florida students

So far President Joe Biden's student debt relief has amounted to $145 billion for about 4 million borrowers. Under his new plan, which he previewed Monday, another 4 million could see their debts wiped away.

In addition, more than 10 million borrowers could get $5,000 or more in relief and 23 million borrowers suffering from years of added interest could see their amounts pushed back down to the original levels.

The new plan, which still needs to be finalized and survive the inevitable court challenges, includes five different ways to reduce or cancel student debt. If finalized, here's what they would do.

Biden wants to reduce mountains of accrued interest for more than 25 million borrowers

One of the biggest complaints about student loans is the interest accrued, which can leave borrowers dealing with higher debts than their original loan even after years of repayments. Under this plan, that amount would be reduced or eliminated:

• All income levels: Up to $20,000 of unpaid interest would be canceled.

• Low- and middle-class: All interest accrued since entering repayment would be canceled for single borrowers who earn $120,000 or less or married borrowers earning $240,000 or less.

Borrowers would not need to apply for this, it would be applied automatically for those who qualify.

People eligible for relief who have not yet joined SAVE would get relief anyway

People enrolled in the government's income-driven repayment plan, Saving on a Valuable Education (SAVE), have seen billions in debt cancellations and reductions as the Biden-Harris administration has taken steps to clarify debt-relief practices and remove application issues. Under this plan, the administration would identify an estimated 2 million borrowers who are eligible for these measures but have not yet enrolled in SAVE and forgive their debts.

The measures include canceling the remaining student debt for:

• Borrowers who originally took out $12,000 or less who have been repaying for 10 years

• Borrowers in public service for 10 years who have made 120 months of qualifying payments

• Borrowers who have been cheated by schools, saw schools close, or were covered by court settlements

• Borrowers with total and permanent disabilities

Been paying student debt for more than 20 years? Your debt would be cleared

If you entered repayment 20 or more years ago your debt would be canceled. Qualifying debt would include:

• Undergraduate debt: If you entered repayment on or before July 1, 2005

• Graduate school debt: If you entered repayment on or before July 1, 2000

"Both Direct Loans and Direct Consolidation Loans that repay only undergraduate study or graduate study for 20 or 25 years respectively are eligible for relief in this proposal," the White House said in a release. "Borrowers would not need to be on an income-driven repayment plan to qualify."

If your school ripped you off, you can get relief under new plan

If the plan goes through as written, federal student loans would be canceled for enrollment in "low-financial-value" programs. This would include loans associated with:

• Institutions or programs who lost certification or were denied recertification in the federal student aid program because they cheated or took advantage of students

• Institutions that abruptly closed and "failed to provide sufficient value"

Federal student debt could be canceled for hardship

Under this plan, federal student loan debt would be canceled for "borrowers experiencing hardship in their daily lives that prevents them from fully paying back their loans now or in the future."

When would the new student loan debt forgiveness plans go into effect?

"If these plans are finalized as proposed," the White House said, "this fall the Administration would begin canceling up to $20,000 in interest for millions of borrowers and full loan forgiveness for millions more." But that "if" is doing a lot of work.

Experts say that July next year would be the earliest these programs would fully take effect. The Department of Education is considering taking actions to speed things up and bring relief to some borrowers as soon as this fall.

Biden has been attempting different methods of student debt relief for years only to see them challenged by Republicans and blocked by the Supreme Court.

Florida joins federal lawsuit against SAVE Plan

There may be road bumps, though. On Tuesday Florida Attorney General Ashley Moody joined Arkansas, Georgia, Missouri, Ohio and Oklahoma in a federal lawsuit against the SAVE Plan, calling it an "extraordinarily expensive and controversial policy that he couldn't get through Congress" and accusing Biden of bragging about getting around the Supreme Court.

“We will fight in court to make sure that hard-working Americans, who are struggling to buy groceries thanks to Biden, are not on the hook for other people’s debt,” Moody said in a statement.

How much do Floridians owe in federal student debt?

According to the U.S. Department of Education's Federal Student Aid site, as of Sept. 30, 2023, the total federal student loan debt balance in Florida was $103.3 billion, including outstanding principal and interest balances, for 2.7 million borrowers. This includes Direct Loans, Federal Family Education Loans (FFEL) and Perkins Loans but does not include private loan debt. That's also down from the $105.4 billion it was just months previously.

That puts Florida students at the third highest amount of federal student loan debt, behind California ($146.7 billion) and Texas ($112.7 billion). More than 1.4 million Floridians are carrying up to $20,000 in debt, and 1.3 million owe more than $20,000. Nearly 230,000 Floridians owe more than $100,000.

The average federal student loan for Florida borrowers was $38,065, as of Sept. 30, 2023. That was the fourth highest in the U.S., after Washington, D.C. ($53,782), Maryland ($42,280), Georgia ($40,804), and Virginia ($39,899). The average federal student debt in the U.S. was $35,099.

According to Forbes, the average student debt in the U.S. for 2024, including federal and private loans, was $28,950.

How much student debt has the Biden Administration forgiven?

According to a release, to date the government under Biden has approved nearly $145 billion in targeted relief for more than 3.6 million borrowers, including:

• $62.5 billion for 871,000 public service workers, including teachers, firefighters, nurses, and more through fixes to Public Service Loan Forgiveness that began in October 2021.

• $45.6 billion for 930,500 borrowers through attention to administrative failures and loan servicer errors.

• $22.5 billion for 1.3 million borrowers cheated by their schools, who saw their schools abruptly close, or who were covered by related court settlements.

• $14 billion for 548,000 borrowers with a total and permanent disability.

This article originally appeared on The Daytona Beach News-Journal: Student loan forgiveness in Florida: New plan is out from Biden