(NationRise.com) – President Joe Biden revealed a new plan to forgive student loan debts for millions of Americans. The plan was announced on April 8th. If finalized, it will eliminate up to $20,000 worth of student loan debt for an estimated 25 million Americans. It will also wipe out the interest for borrowers who are eligible for the SAVE IDR plan, an Income-Driven repayment plan available for low-income Americans.
The proposal will primarily focus on borrowers with “runaway interest” that, according to the administration, has prevented Americans from paying down the principal of their loans. It will also be available to those who have been paying their loans for at least two decades and borrowers dealing with “hardship.”
The Biden administration is also seeking to automatically forgive the debts of borrowers who already qualified for the Public Loan Forgiveness or SAVE plans. Additionally, it will consider borrowers who have applied for other programs that force applicants through a lot of red tape to qualify. That is expected to help an additional 2 million Americans.
Finally, Biden will work with the Department of Education to forgive the student loan debts of borrowers who studied under what it deems “low-financial-value” programs, that is, degrees, certifications, and other programs leading to careers that generally have a low income. It will also consider those who are deemed at risk of defaulting.
Student loan repayments were paused during the health crisis in 2020 and resumed in October of 2023. However, the Department of Education reported that delinquencies and defaults on repayments won’t be reported until October 2024. This means that anyone who has fallen behind still has time to catch up until September 30th. The loans will continue accruing interest.
The Supreme Court already struck down an attempt of the Biden administration to forgive the student loan debts of millions of Americans in amounts up to $10,000 in 2023. They said the administration overstepped its authority in a 6-3 vote. It would have cost the government as much as $400 billion. Biden claimed that the plan would have helped 43 million Americans. It was initially announced in August 2022.
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