The 5 groups of student-loan borrowers Biden is targeting for his new broad debt cancellation plan
- The Education Department is moving forward with its new plan for broad student-debt relief.
- It released a paper outlining what it will discuss during upcoming negotiations.
President Joe Biden's Education Department is moving forward with its broad student-debt cancellation plan — and it signaled the categories of borrowers it's keeping an eye on as it crafts the new relief.
Last week, the Education Department released new details on the process to cancel student debt using the Higher Education Act of 1965. Unlike Biden's first plan to cancel student debt that the Supreme Court struck down at the end of June, the Higher Education Act requires the administration undergo negotiated rulemaking — a lengthy process that includes multiple negotiation sessions and periods of public comment.
The latest update from the department was the announcement of negotiators who had been selected to participate in the session, along with a paper outlining what the sessions will look like, the first of which will be on October 10 and 11.
The paper included a five distinct categories of borrowers the department is looking to discuss with the negotiation committee:
Borrowers whose balances have grown due to unpaid interest, leaving them with larger balances than their original principal
Borrowers who are eligible for relief under programs like income-driven repayment but did not apply for those programs
Borrowers who attended schools that left them with too much debt compared to post-graduation earnings
Borrowers who entered repayment before new benefits became available
Borrowers experiencing financial hardship "in ways that the current student loan system does not adequately address"
These are the first details the department has released so far, and the discussions could be further tailored or changed as the negotiations continue. However, it indicates how Biden is thinking about his new plan for relief by targeting borrowers who have struggled with repayment to no fault of their own.
Additionally, there is no guarantee borrowers who qualified for Biden's first debt relief plan will qualify this time around. The first plan was debt cancellation of up to $20,000 for Pell Grant recipients making under $125,000 a year, and up to $10,000 for other federal borrowers under the same income cap. The amounts of relief, along with whether there will be an income cap, for the new plan are unclear at this point.
The progress toward new debt relief comes as millions of federal borrowers are entering repayment after an over three-year pause. On Sunday, pandemic relief for borrowers officially ended — it marked the first day bills could start becoming due. While Biden announced a series of measures to ease the transition, like a 12-month "on-ramp" period during which missed payments would not be reported to credit agencies, borrowers are still struggling to foot the extra monthly expense.
Even so, Rep. Alexandria Ocasio-Cortez previously told borrowers not to give up hope on broad relief just yet.
"There is absolutely still a chance of cancellation," she said last month. "When the Supreme Court struck it down, they said that the administration couldn't use a specific avenue, namely the HEROES Act, but there are alternative avenues that we have pursued. They are going to be laying out that program over the course of the next year."