Joe Biden's Plan B for Student Loan Forgiveness

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Giulia Carbonaro is a Newsweek reporter based in London, U.K. Her focus is on the U.S. economy, housing market, property insurance market, local and national politics. She has previously extensively covered U.S. and European politics. Giulia joined Newsweek in 2022 from CGTN Europe and had previously worked at the European Central Bank. She is a graduate in Broadcast Journalism from Nottingham Trent University and holds a Bachelor's degree in Politics and International Relations from Università degli Studi di Cagliari, Italy. She speaks English, Italian, and a little French and Spanish. You can get in touch with Giulia by emailing: g.carbonaro@newsweek.com.

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The Biden administration is reportedly planning a narrower student loan forgiveness plan after the president's initial, broader initiative was struck down by the Supreme Court in late June.

A draft of the new proposals was released by the Education Department on Monday as something of a Plan B.

The initiative, which represents the Biden administration's second attempt at student loan relief, would focus on specific groups of borrowers who are seen as especially vulnerable and experiencing hardship, including those facing soaring interest payments and earning little income.

Joe Biden
Joe Biden speaking at an event in the East Room of the White House on October 30, 2023, in Washington, D.C. The Department of Education has announced a new draft proposal for student debt forgiveness. Chip Somodevilla/Getty Images

While the plan is far from being finalized, the draft proposals suggest the measures will target four groups:

  • Borrowers who currently have outstanding federal student loan balances that exceed what they originally borrowed
  • Those with loans that first entered repayment 25 or more years ago
  • Those who took out loans to attend career-training programs that created unreasonable debt loads or provided insufficient earnings for graduates, as well as borrowers who attended institutions with unacceptably high student loan default rates
  • Those who are eligible for other loan-forgiveness programs under repayment plans like income-driven repayment or targeted relief programs like Public Service Loan Forgiveness, or closed school loan discharges, but did not apply

The inclusion of a fifth group, targeting "those who are experiencing financial hardship that the current student loan system does not currently adequately address," is being discussed.

The draft plan is still going through the process of being refined. Members of the public will be able to provide written feedback next year.

"President Biden and I are committed to helping borrowers who've been failed by our country's broken and unaffordable student loan system," U.S. Secretary of Education Miguel Cardona said.

"These draft proposals would build on the historic $127 billion in loan forgiveness the Biden-Harris Administration has already approved for nearly 3.6 million borrowers. We are fighting to ensure that student debt does not stand in the way of opportunity or prevent borrowers from realizing the benefits of their higher education."

The new plan is much narrower than Biden's initial measure, which would have canceled up to $20,000 in federal student loans for borrowers with an annual income below $125,000 or couples with a combined income below $250,000.

But in late June, Supreme Court justices ruled in a six to three decision that Biden did not have the authority to introduce his sweeping debt-forgiveness plan.

Despite this setback, the Biden administration has still managed to cancel more than $48 billion in debt since last summer through existing federal student loan forgiveness programs, as reported by CNN.

Newsweek contacted the Department of Education for comment by phone on Tuesday.

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About the writer

Giulia Carbonaro is a Newsweek reporter based in London, U.K. Her focus is on the U.S. economy, housing market, property insurance market, local and national politics. She has previously extensively covered U.S. and European politics. Giulia joined Newsweek in 2022 from CGTN Europe and had previously worked at the European Central Bank. She is a graduate in Broadcast Journalism from Nottingham Trent University and holds a Bachelor's degree in Politics and International Relations from Università degli Studi di Cagliari, Italy. She speaks English, Italian, and a little French and Spanish. You can get in touch with Giulia by emailing: g.carbonaro@newsweek.com.

Writers Page

Giulia Carbonaro is a Newsweek reporter based in London, U.K. Her focus is on the U.S. economy, housing market, property ... Read more