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April 08, 2024 at 10:18 PM
What You Need to Know
- Some 25 million borrowers would have their accrued interest fully or partially eliminated.
- Over 10 million would see at least $5,000 in debt cancelled.
- And 4 million would have their balances cleared.
President Joe Biden offered details of a sweeping alternative student debt plan that would offer relief to tens of millions of American borrowers during a visit to the college town of Madison, Wisconsin, as he seeks to excite young voters frustrated after his original program was struck down by the Supreme Court.
Biden’s “Plan B” would see loans reduced or wiped out for millions of Americans — including those whose debt exceeds their original principal amount or who attended universities that offered little career benefits.
Individuals who have made student loan payments for more than 20 years, are experiencing financial hardship, or who are eligible for federal loan forgiveness programs but have not previously enrolled would also be eligible.
Biden on Monday called mounting student debt “a drag on our local economies.”
“It’s a drag on the economies when you can’t afford to buy a home, start that small business, chase that career that you’ve been dreaming about for a long time,” Biden said.
Still, the proposal must withstand expected lawsuits that could stretch into next year, placing the issue of rising student debt squarely in the crosshairs of November’s presidential election. A lengthy regulatory process also threatens to prevent relief if a new administration scraps the plan.
The White House believes that if the plan is implemented, more than 30 million Americans would have federal loans forgiven when coupled with actions the administration has already taken.
An estimated 25 million borrowers would have their accrued interest fully or partially eliminated, more than 10 million borrowers would see at least $5,000 in debt cancelled, and 4 million borrowers would have their balances cleared.
Around 2 million people who are eligible for government programs, such as public service loan forgiveness or closed-school discharge for institutions that shuttered during enrollment, could have their loans automatically forgiven. Some borrowers might qualify across multiple categories.
Americans eligible to receive assistance for unpaid interest could see up to $20,000 in forgiveness regardless of their income status.
Low- and middle-income individuals also in the government’s income-driven repayment plans may qualify to receive cancellation for the total amount of interest growth to their balances since they started the program. Those borrowers must earn at most $120,000 in income, or $240,000 for married couples.
Biden defended his plan from criticism that the administration has focused on helping the college-educated at the expense of blue-collar workers.
