The Supreme Court rejected the Biden administration's plan to forgive as much as $20,000 in federal student loan debt per borrower, but that hasn't completely derailed the efforts to provide much-needed relief. In the months since the Supreme Court's decision, the administration has already rolled out several new initiatives, such as its 12-month repayment "on-ramp" and the SAVE income-driven repayment plan.
However, it appears that the president isn't done just yet. The Biden administration recently released some additional details about its new student loan forgiveness efforts, and it is more targeted at those who need relief than the previous version.
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The new plan targets a few specific groups
To be sure, the new student loan forgiveness efforts are still in the early stages, and at this point are intended as guidelines for a newly formed Student Loan Relief Committee to explore further. However, there are five specific groups mentioned in the paper released by the Department of Education.
- Borrowers whose balances have grown because of the accumulation of unpaid interest on their accounts. You might have heard student loan horror stories that sound like "I borrowed $50,000, have made my required payments for 10 years, and now owe $60,000." This is a group the administration wants to target.
- Borrowers who would be eligible for forgiveness under income-driven repayment programs but have not applied for them. Income-driven repayment plans offer loan forgiveness after 20 or 25 years in repayment, but borrowers not enrolled in these plans won't get it.
- Students who took loans for programs that didn't provide a "minimum level of financial value" to make repaying loans affordable. In other words, if someone borrowed $100,000 for a degree that could be reasonably expected to produce a $35,000 salary, it could be worth looking into forgiveness options.
- Borrowers who entered repayment or obtained loans before certain programs and benefits were created. For example, the most beneficial income-driven repayment and loan forgiveness plans didn't exist when many people obtained federal student loans.
- Borrowers with hardships that aren't being adequately addressed by the current student loan repayment system. It's not completely clear what this means, but to name one hypothetical example, what if a borrower earns enough money to (theoretically) afford repayment, but lives in an extremely high-cost area?
Now, while the first two points are pretty straightforward, the other three are rather vague. So, it's difficult to say who in particular might benefit. For example, I took out my first student loan in 2003, and first entered repayment in 2006. This was before most of the current income-driven repayment plans existed, so this is an example of something that could be considered.
The first public hearings of the Student Loan Relief Committee, which will ultimately negotiate the new forgiveness plan, are set to take place on Oct. 10 and 11, and subsequent meetings will occur in November and December. So, over the next few months, we could see more concrete details about what student loan forgiveness 2.0 could look like, and who might be able to benefit.
