The Biden-Harris administration recently unveiled plans for a student debt handout, with the Department of Education gearing up to contact tens of millions of Americans regarding potential relief options.
According to the Department of Education, individuals with at least one federally held student loan can anticipate receiving an email with details on the relief options.
However, borrowers have until August 30 to decline the aid if they prefer to opt-out. The finalization of the rules surrounding this relief is expected to take place in the fall.
The Department of Education emphasized that while the email does not guarantee specific borrowers will be eligible, it is estimated that over 30 million borrowers could potentially benefit from these proposed rules.
This group includes individuals who find themselves owing more money than they initially borrowed due to accumulated interest—a situation described by the Department as “runaway interest.”
One proposed rule aims to automatically relieve borrowers of up to $20,000 from the amount by which their loans exceed the initial repayment sum.
Additionally, Secretary of Education Miguel Cardona could potentially forgive the entire balance growth if the borrower is enrolled in an Income-Driven Repayment plan and meets specific income criteria.
Furthermore, the Department of Education also envisions relief for an estimated 2.6 million borrowers who still carry outstanding debt from loans initiated at least twenty years ago.
Joe Biden hailed this initiative in a statement, boasting of the administration’s efforts to “cancel student debt for approximately 30 million Americans” and portraying it as a major step forward. He also highlighted the previous actions taken by the administration, such as canceling student debt for nearly 5 million Americans and increasing the maximum Pell Grant.
While the relief measures may sound generous, their timing and potential impact are drawing varied reactions across the political spectrum, with many questioning the motives behind this major announcement.
Below is the full press release from the U.S. Department of Education:
Biden-Harris Administration Takes Next Step Toward Additional Debt Relief for Tens of Millions of Student Loan Borrowers This Fall
Starting tomorrow, the Department will email borrowers telling them about potential debt relief and giving them the opportunity to opt out
The Biden-Harris Administration today announced that it will begin the next step toward providing student debt relief to tens of millions of borrowers this Fall. Starting tomorrow, the U.S. Department of Education (Department) will begin emailing all borrowers with at least one outstanding federally held student loan to provide updates on potential student debt relief, and to inform them they have until August 30 to call their servicer and opt out if they do not want this relief. The rules that would provide this relief are not yet finalized, and the email does not guarantee specific borrowers will be eligible. The Department will provide additional information to borrowers once the rules are finalized this fall. These proposed rules build upon the Administration’s existing work that has approved more than $168 billion in student loan relief for nearly 4.8 million borrowers through various actions. These rules, if finalized as proposed, would bring the total number of borrowers eligible for student debt relief to over 30 million, including borrowers who have already been approved for debt cancellation by the Biden-Harris Administration over the past three years.
“Today, the Biden-Harris administration takes another step forward in our drive to deliver student debt relief to borrowers who’ve been failed by a broken system,” said U.S. Secretary of Education Miguel Cardona. “These latest steps will mark the next milestone in our efforts to help millions of borrowers who’ve been buried under a mountain of student loan interest, or who took on debt to pay for college programs that left them worse off financially, those who have been paying their loans for twenty or more years, and many others. The Biden-Harris Administration made a commitment to deliver student debt relief to as many borrowers as possible as quickly as possible, and today, as we near the end of a lengthy rulemaking process, we’re one step closer to keeping that promise.”
In April, the Administration released its first set of draft rules that proposed authorizing the Secretary of Education to grant student debt relief to tens of millions of borrowers across the country, including those whose balances have grown due to runaway interest and those who entered repayment on their loans a long time ago, among others. If these rules are finalized as the Department has proposed, they would authorize the Secretary of Education to provide partial or full debt relief for the following groups of borrowers:
Borrowers who owe more now than they did at the start of repayment. Borrowers would be eligible for relief if they have a current balance on certain types of Federal student loans that is greater than the balance of that loan when it entered repayment due to runaway interest. The Department estimates that this debt relief would impact nearly 23 million borrowers, the majority of whom are Pell Grant recipients.
Borrowers who have been in repayment for decades. If a borrower with only undergraduate loans has been in repayment for more than 20 years (received on or before July 1, 2005), they would be eligible for this relief. Borrowers with at least one graduate loan who have been in repayment for more than 25 years (received on or before July 1, 2000) would also be eligible.
Borrowers who are otherwise eligible for loan forgiveness but have not yet applied. If a borrower hasn’t successfully enrolled in an income-driven repayment (IDR) plan but would be eligible for immediate forgiveness, they would be eligible for relief. Borrowers who would be eligible for closed school discharge or other types of forgiveness opportunities but haven’t successfully applied would also be eligible for this relief.
Borrowers who enrolled in low-financial value programs.If a borrower attended an institution that failed to provide sufficient financial value, or that failed one of the Department’s accountability standards for institutions, those borrowers would also be eligible for debt relief.
If finalized as proposed, these new rules would authorize relief for borrowers across the country who have struggled with the burden of student loan debt. The Department expects that all four of these proposed forms of relief would be provided to eligible borrowers without requiring any action from borrowers; no application would be needed.If, however, borrowers prefer to opt out of this debt relief for any reason, they can do so by contacting their servicer by Aug. 30, 2024. Borrowers who opt out of this debt relief will not be able to opt back in, and they will also be temporarily opted out of forgiveness due to enrollment in an IDR plan until the Department is able to automatically assess their eligibility for that benefit in a few months. In addition, borrowers would only be eligible for the proposed relief if they have entered repayment at the time that the Department would be determining eligibility, after the proposed rules are finalized.
More information for borrowers about this debt relief is available at StudentAid.gov/debt-relief.An unparalleled track record of borrower assistance
The Biden-Harris Administration has taken historic steps to reduce the burden of student debt and ensure that student loans are not a barrier to educational and economic opportunity for students and families. The Administration secured a $900 increase to the maximum Pell Grant—the largest increase in a decade—and finalized new rules to help protect borrowers from career programs that leave graduates with unaffordable debts or insufficient earnings. The Administration continues its work to issue debt relief regulations under the Higher Education Act, with final regulations expected this fall.
The Biden-Harris Administration has approved the following debt relief for borrowers:
- $69.2 billion for 946,000 borrowers through fixes to Public Service Loan Forgiveness (PSLF).
- $51 billion for more than 1 million borrowers through administrative adjustments to IDR payment counts. These adjustments have brought borrowers closer to forgiveness and addressed longstanding concerns with the misuse of forbearance by loan servicers.
- $28.7 billion for more than 1.6 million borrowers who were cheated by their schools, saw their institutions precipitously close, or are covered by related court settlements.
- $14.1 billion for more than 548,000 borrowers with a total and permanent disability.
- $5.5 billion for 414,000 borrowers through the SAVE Plan.