Guide to Student Loan Forgiveness: It’s possible that President Joe Biden’s second plan to forgive student loans will be very different from his first one.
After the Supreme Court ruled against Biden’s plan in June to forgive up to $20,000 in student loans for tens of millions of people, the president said right away that he would try to get the help in another way.
His government has already started that process. To work out the details, they set up a “Student Loan Debt Relief Committee” with members from the NAACP, the National Consumer Law Center, and several student loan borrowers.
This is what we know so far.
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10% of borrowers could no longer get help.
Biden’s original plan to forgive student loans would have helped almost 40 million Americans.
High school expert Mark Kantrowitz said that the president’s Plan B for relief is going to be much more limited in what it can do. That’s because the justices said the president’s first plan, which would have helped over 90% of people with government student loans, went too far.
In the majority decision for Biden v. Nebraska, Chief Justice John Roberts asked, “Can the Secretary use his powers to cancel $430 billion in student loans, wiping out the loan balances of 20 million borrowers as the pandemic winds down to its end?” “We can’t believe the answer would be yes.”
Kantrowitz said that this round, less than 10% of people who have federal student loans are expected to qualify.
Luke Herrine, an assistant professor of law at the University of Alabama, also thinks that a lot fewer people will be eligible for the next program of loan forgiveness.
He said in a previous talk with CNBC, “I think it would be easier to defend in front of a court that is skeptical of broad authority.”
Five types of borrowers may be able to get loans.
A new report from the U.S. Department of Education says that the Biden administration is still focused on helping five specific groups of borrowers. These are:
- Lenders whose current sums are higher than the amounts they borrowed.
- People who began paying back their college loans at least 25 years ago.
- Students who went to classes that might not have been worth it.
- There are people who can get help from current programs, like Public Service Loan Forgiveness, but haven’t applied yet.
- Debtors having a hard time with money.
It’s likely to take longer to forget this time, say experts. Biden first tried to get rid of student loans with an executive order in August 2022. He told borrowers that they would be free of their debt within six weeks of finishing the necessary paperwork.
This time, he’s talking about how rules are made. That process takes longer and usually includes a time for public opinion and other steps that take time.
Kantrowitz said, “It can take up to a year to make new rules.”
He said that if the government wins this time, borrowers might be able to get their debts forgiven around the time of the 2024 election.
