The Biden administration is moving forward with its second attempt to cancel the student loans of some borrowers after the U.S. Supreme Court rejected its initial plan.
“Student loan debt in this country has grown so large that it siphons off the benefits of college for many students,” Education Undersecretary James Kvaal said. “Some loans made to young adults stretch into retirement, with no hope of being repaid. These debt burdens are shared by families and communities.”
The latest attempt is based on the Higher Education Act, which gives the education secretary authority to waive student loans, although how far that power extends is the subject of legal debate. The Education Department hopes to settle the dispute by adding federal rules that clarify when the secretary can waive loans.
It’s unclear who will be eligible for forgiveness under the new plan or how much relief they would get. President Biden has called for a new plan to help “as many borrowers as possible,” but it’s uncertain whether it will be as expansive as his first proposal. That plan would have canceled up to $20,000 in federal student loans for borrowers with incomes below $125,000 or couples below $250,000.
The Education Department released a position paper identifying several categories of borrowers who could qualify for student loan forgiveness under the new program. These include:
- Borrowers who have experienced significant balance growth because of interest accrual and fees;
- Those who have been unable to apply for existing student loan forgiveness programs;
- Borrowers with extreme financial hardships; and
- Those who took out student loans many years ago but who did not receive sufficient value from the educational program they attended.
To change the rules, the Education Department is required to assemble a committee of outside negotiators to help hash out details. The department routinely uses a process known as negotiated rulemaking to enact federal regulation, and it’s required for any regulation related to student financial aid. It can be a long and painstaking process, and it often finishes without consensus among negotiators.
The hearing began last week with 14 people from outside the federal government chosen by the Biden administration. The negotiators all come from outside the federal government and represent a range of viewpoints on student loans. The panel, which will meet for a total of three hearings, includes students and officials from a range of colleges, along with loan servicers, state officials and advocates.
Negotiators are ironing out the details of the proposal in a series of meetings that began last week and will continue into December. At the end of the process, negotiators will vote on a proposed rule drafted with input from their discussions. If they reach consensus on a proposal, the department will move forward with it. If they don’t, the agency will propose its own plan, which can be finalized after a public comment period.
Meanwhile, Republicans rallied against the cancellation, saying it would add an unfair benefit for college graduates at the expense of millions of taxpayers who didn’t attend college.
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