The President of the United States (US) Joe Biden has been planning for a student loan cancellation and this is going forward as a proposed regulation. This also offers him a fresh chance to deliver on a campaign promise and energise young voters ahead of the November election. This was stated in a report from PTI.
Today, Tuesday, April 16, the education department filed paperwork for a new regulation that would deliver the cancellation in connection with Biden's announcement from last week.
It still has to go through a 30-day public comment period and another review before it can be finalised. It's a more targeted proposal than the one the US Supreme Court struck down last year.
The new plan uses a different legal basis and seeks to cancel or reduce loans for more than 25 million Americans. Conservative opponents, who see it as an unfair burden for taxpayers who didn't attend college, have threatened to challenge it in court.
The Democratic president highlighted the plan during a trip to Wisconsin last week, saying it would provide “life-changing” relief.
The five categories
Biden laid out five categories of people who would be eligible for help. The new paperwork filed by the education department includes four of those categories, while a separate proposal will be filed later, addressing how people facing various kinds of hardship can get relief.
The broadest forgiveness category would help borrowers who owe more than they originally borrowed because of runaway interest.
It would eliminate up to $20,000 in interest for anyone in that situation, while those with annual incomes below $120,000 and enrolled in income-driven repayment plans would get all their interest erased with no maximum limit.
Another category would cancel loans for people who have been paying back their undergraduate (UG) student loans for at least 20 years, and those who have been paying graduate loans for the last 25 years. It would automatically cancel loans for those who went to colleges or programmes considered to have low financial value.
Borrowers who are eligible for other federal forgiveness programmes but haven't applied would also get their loans waived off. Federal education officials would use existing data to identify those people and offer relief. It's intended to reach those who don't know about other programmes or have been deterred by complicated application processes.
The plan was drafted with the help of students, college officials, state officials, borrower advocates and loan servicers. During the process, advocates pushed for a fifth category of forgiveness for people who have different kinds of hardship that prevent them from being able to repay their loans.
The education department said it's still working on the details of that rule, with a separate proposal to be expected “in the coming months".
The Biden administration said it plans to start implementing a few parts of the new proposal as soon as this fall, using the education secretary's authority to implement rules early in certain cases.
Moreover, the White House says it's confident the new plan is on solid legal ground, saying the Higher Education Act gives the education secretary the power to waive student loans in certain cases.
