Biden administration releases proposed guidelines for student loan hardship
February 21, 2024, 10:48 am CST
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The Biden administration released proposed guidelines last week that will extend debt relief to borrowers with federal student loans who are facing financial hardship that impairs ability to pay. (Image from Shutterstock)
The Biden administration released proposed guidelines last week that will extend debt relief to borrowers with federal student loans who are facing financial hardship that impairs ability to pay.
The plan includes automatic relief for borrowers likely to be in default in two years, based on information already known to the U.S. Department of Education, according to a Feb. 15 press release. Others may obtain relief through an application.
The amount waived could include the entire balance of the loan. Factors used to assess hardship include household income, assets, the loan balance owed, repayment status, consumer debt balances, age, disability, high-cost essential expenses and whether borrowers received a Pell Grant.
The proposal will be discussed during a negotiated rulemaking session Feb. 22 and 23.
ABC News, the Associated Press and CNBC have coverage.
The hardship proposal is part of what is known as President Joe Biden’s Plan B for student loan forgiveness, which was developed after the U.S. Supreme Court struck down in 2023 a different plan that would have canceled about $430 billion in student debt. That plan was based on a law that allows modifications of student-aid programs during national emergencies. The Education Department said the COVID-19 pandemic was such an emergency.
The Supreme Court said the law did not give the Education Department the authority to rewrite the Education Act “from the ground up.”
Some borrowers are getting good news about debt relief under a different program through email starting Wednesday.
The Biden administration’s plan to accelerate student debt under its Saving on a Valuable Education plan, known as the SAVE plan, has led to the automatic cancellation of $1.2 billion in debt for nearly 153,000 borrowers, according to a Feb. 21 press release and the Washington Post.
Borrowers getting debt relief must be enrolled in the SAVE plan, must have originally borrowed $12,000 or less for college, and must have been making payments for at least 10 years.
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Originally posted on: https://www.abajournal.com/news/article/biden-administration-releases-proposed-guidelines-for-student-loan-hardship/?utm_source=feeds&utm_medium=rss&utm_campaign=site_rss_feeds