New Student-Debt Relief Could Come This Fall; What You Need to Know

Biden formally announced the new plan during a speech in Madison, Wisconsin, on Monday, saying that even when borrowers “have worked hard and paid their student loans, their debt increases, not diminishes.”

“Too many people feel the strain and stress, wondering if they’re going to get married, have their first child, start a family, because even if they get by, they still have this crushing, crushing debt,” Biden said.

While more details on the plan will be announced in the coming months, Monday’s announcement offers a fresh look into the types of borrowers that could benefit from this debt relief. Here are the key details from the administration’s proposal.

Which borrowers will qualify for this relief?

The administration outlined five groups of borrowers that could benefit from this relief. They include:

1. Up to $20,000 in debt relief for over 25 million borrowers whose balances have grown due to unpaid interest. 23 million of those borrowers would have “all of their balance growth forgiven,” per the White House.

2. Relief for borrowers eligible for loan forgiveness under repayment programs like Public Service Loan Forgiveness or an income-driven repayment plan but who have not yet enrolled

3. Relief for borrowers who entered repayment over 20 years ago. Borrowers with undergraduate student debt would qualify if they entered repayment on or before July 1, 2005, and borrowers with graduate debt would qualify if they first entered repayment on or before July 1, 2000.

4. Relief for borrowers with who took on debt for “low-financial-value programs,” including schools that lost financial aid eligibility or were found to have defrauded students.

5. Relief for borrowers experiencing financial hardship. A senior administration official told Business Insider that more details on hardship requirements will be released in the coming months, but it’s likely to address those who are at high risk of defaulting, along with borrowers who have other financial burdens on top of their student debt.

What is the timeline for this relief?

The administration said it expects to begin implementing this relief in the fall. In the coming months, it will publish the proposed text for the new rules to the Federal Register, after with the public will have an opportunity to submit comments on the proposals.

Is this relief legal?

This new plan results from the Supreme Court striking down Biden’s first attempt at broad debt cancellation at the end of June. While the first plan used the HEROES Act of 2003, which allows the education secretary to waive or modify student-loan balances in connection with a national emergency like the COVID-19 pandemic, this new plan uses the Higher Education Act of 1965, which doesn’t require an emergency but does require a lengthy regulatory process.

Senior administration officials told reporters during a Sunday press call that they believe this new plan for relief is consistent with the Supreme Court’s decision, noting that the new plan differs significantly from the one the high court struck down.

Of course, the plan’s legality is ultimately up to the courts, and it’s likely conservative groups will launch legal challenges against the plan in the coming months. There are already ongoing challenges to some of Biden’s other targeted debt relief efforts — for example, a group of GOP state attorneys general recently sued the administration over its new SAVE income-driven repayment plan, arguing that loan forgiveness through the plan is unconstitutional.