Biden administration releases formal proposal for new student loan forgiveness plan

In an effort to alleviate the weighty student debt burden in the United States, the Biden administration has unveiled a revised student loan forgiveness proposal, aiming to clear balances for millions of Americans this fall.

The plan, a result of extensive revisions following an earlier failed attempt, has been carefully crafted to address legal challenges and provide targeted relief to specific groups.

The key elements of the proposal include: * **Principal Balance Cancellation:** Borrowers enrolled in the Education Department’s income-driven repayment plans and earning less than $120,000 as single filers may qualify for cancellation of the full amount by which their current debt exceeds the original amount borrowed.

* **Interest Cancellation:** All eligible borrowers, regardless of income, can receive up to $20,000 in relief towards unpaid interest on their loans.

* **Long-Term Payment Completion:** Borrowers who have been repaying their undergraduate loans for 20 years or more, or graduate loans for 25 years or more, will receive full debt forgiveness.

* **Closed School Discharge:** Eligible borrowers whose institutions failed to provide sufficient value will have their loans discharged.

The administration hopes this revised proposal will withstand legal scrutiny by targeting specific groups of borrowers and using the regulatory process.

However, legal challenges are likely, as some argue that the President lacks the authority to forgive debt through executive action.

The public has 30 days to comment on the proposal, after which the Biden administration will review the feedback and release a final rule.

Relief could begin as early as this fall, assuming no major legal setbacks.