President Biden on Monday will unveil his second major attempt at large-scale student loan forgiveness with a new set of proposals the administration says could provide debt relief for more than 30 million Americans.
Mr. Biden will detail the proposal Monday afternoon at Madison College’s Truax campus in Wisconsin. It is much smaller in scope than his first debt relief plan, which the Supreme Court ultimately declared unconstitutional.
The smaller plan would cancel up to $20,000 in interest for more than 25 million borrowers whose unpaid interest has swelled beyond the size of the original loan. By erasing the interest, the proposal would reset the borrowers’ income back to the initial balance.
Borrowers paying down their student loans for decades would get all remaining debt erased under the new plan. Loans used for a borrowers’ undergraduate education would be canceled if they had been in repayment for at least 20 years.
The plan would also cancel loans for those who went to for-profit colleges the administration has deemed “low-value.”
Borrowers would be eligible for cancellation if, while they attended the program, the average student loan payment among graduates was too high compared to their average salary. It would also provide debt relief to students who attended for-profit universities that have since closed.
Under the plan, borrowers who experienced hardship in their daily lives, preventing them from fully paying back their loans now or in the future would also be eligible for student debt relief.
The proposal would also wipe away debt for borrowers who are eligible for loan forgiveness but have not yet applied.
Administration officials will pan out across the country to promote the plan. In addition to Mr. Biden’s trip to Madison, second gentleman Doug Emhoff will travel to Phoenix to discuss the proposal, and Education Secretary Miguel Cardona will highlight the plan in New York.
The new regulations come roughly a year after the Supreme Court nixed Mr. Biden’s first debt cancellation plan, which would have wiped away up to $20,000 in student debt for borrowers making less than $125,000 per year.
Mr. Biden is hoping the new debt relief plan will boost his sagging polling numbers ahead of the November election, but it is unclear how quickly the administration can finalize the rules.
The latest effort could give him a political boost, especially among young progressives who have soured on Mr. Biden’s handling of the Israel-Hamas conflict.
Several polls show Mr. Biden trailing former President Donald Trump, the presumptive GOP presidential nominee, and needs to turn things around before the election.
Almost half of voters, roughly 48%, said canceling student loan debt is an important issue to them in the 2024 presidential election, according to a poll last month by SocialSphere, a research and consulting firm.
About 70% of Generation Z and millennial respondents said student debt cancelation was an important election issue.
However, the second plan is expected to again face legal challenges from Republican state attorney generals who will ask the courts to block it.
After the Supreme Court nixed his first student plan in June 2023, Mr. Biden vowed that he would try again using different legal authorities to implement debt forgiveness. That started a lengthy process by the Department of Education to redefine how the federal government can eliminate student debt.
The latest proposals are based on a 1965 law, known as the Higher Education Act instead of the Heroes Act of 2003, which was used as the legal justification for the first plan.
The Higher Education Act, signed into law by President Johnson, authorizes the education secretary to waive or release some borrowers’ education debt. Administration officials say the Higher Education Act puts them on stronger legal footing.
“This new path is legally sound,” Mr. Biden said previewing the new plan last year. “It’s going to take longer, but, in my view, it’s the best path that remains to providing for as many borrowers as possible with debt relief.”
Administration officials say the new plan will be finalized through the federal government’s rulemaking process instead of executive order, which was used to implement the first plan. That means there will be a public comment period, which is likely to last for 30 days.
However, some Republican attorneys general have already signaled that they believe the latest proposals are ripe for political challenges.
“As hard-working Americans struggle to buy groceries, Biden thumbs his nose at the court like he has done with so many issues, including immigration, and does what he wants,” Florida Attorney General Ashley Moody said in a statement. “Not only is this unfair, but it violates the separation of powers.”