One of the key actions taken by the Biden administration is the initiation of a rulemaking process led by the Secretary of Education, which aims to create an alternative path to debt relief.
One of the key actions taken by the Biden administration is the initiation of a rulemaking process led by the Secretary of Education, which aims to create an alternative path to debt relief.
United States President Joe Biden has announced new measures aimed at tackling the student debt crisis and supporting individuals burdened by loans.
“In light of the Supreme Court’s ruling this morning, President Biden and his administration have already taken two steps this afternoon aimed at providing debt relief for as many borrowers as possible, as fast as possible, and supporting student loan borrowers,” the White House said in a statement on June 30.
The initiatives include alternative paths to debt relief, the implementation of an affordable repayment plan, and the introduction of a 12-month “on-ramp” to protect vulnerable borrowers from severe consequences.
One of the key actions taken by the Biden administration is the initiation of a rulemaking process led by the Secretary of Education, which aims to create an alternative path to debt relief for a broad range of working and middle-class borrowers, utilizing the Secretary’s authority under the Higher Education Act.
By exploring innovative approaches to debt relief, the administration intends to assist as many borrowers as possible and expedite the provision of relief.
Additionally, the Department of Education has finalized the most affordable repayment plan ever established—the Saving on a Valuable Education plan. The income-driven repayment plan will halve borrowers’ monthly payments, potentially saving the average borrower over $1,000 annually.
Furthermore, the plan will protect borrowers from interest accrual, prevent loan balance growth, and offer loan forgiveness after 10 years of payments for borrowers with original balances of $12,000 or less. These measures aim to make repayment more manageable and help borrowers become debt-free within a shorter time frame.
Recognizing the financial vulnerabilities faced by many borrowers, the Department of Education is instituting a 12-month “on-ramp” to repayment from October 1, 2023, to September 30, 2024.
During this period, financially vulnerable borrowers who miss monthly payments will not be deemed delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies. This safeguard ensures that borrowers facing temporary financial challenges have the opportunity to adjust and fulfill their loan obligations without facing severe consequences.
President Biden’s commitment to addressing the student debt crisis is evident through these new measures.
The administration’s efforts to make college education more affordable and manageable for working and middle-class families include significant increases to Pell Grants, the rectification of broken student loan programs like Public Service Loan Forgiveness, and the approval of over $66 billion in loan cancellation for 2.2 million borrowers, including those defrauded by their educational institutions.
The President’s determination to provide relief to low- and middle-income borrowers stems from his belief that education beyond high school should serve as a ticket to the middle class.
On June 30, the Supreme Court struck down the Biden administration’s student debt forgiveness plan.
