The Biden-Harris Administration’s Student Debt Relief Plan Explained

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The Latest Updates Regarding Federal Student Loan Debt Relief

On Sept. 5, 2024, the U.S. District Court for the Southern District of Georgia issued a temporary restraining order on the proposed student loan relief regulations. The Department of Education (ED) is currently reviewing this order, and we will provide updates on this page as we learn more. Please note: because of the ongoing legislation, some of the information listed below may not be accurate at this time. Call us with any questions you may have at 888-384-0877.

Biden-Harris Administration Takes Next Step Toward Additional Debt Relief for Student Loan Borrowers

Starting Aug. 1, 2024, the U.S. Department of Education (ED) began emailing all borrowers with at least one outstanding federally held student loan to provide updates on potential student debt relief, and to inform them they have until Aug. 30th to call their servicer and opt out if they do not want this relief. The rules that would provide this relief are not yet finalized, and the email does not guarantee specific borrowers will be eligible. ED will provide additional information to borrowers once the rules are finalized Fall 2024.

The proposed rules build upon the Administration’s existing work that has approved more than $168 billion in student loan relief for nearly 4.8 million borrowers through various actions. If finalized as proposed, they would bring the total number of borrowers eligible for student debt relief to over 30 million, including borrowers who have already been approved for debt cancellation by the Biden-Harris Administration over the past three years. In the statement released July 31, U.S. Secretary of Education Miguel Cardona said:

“Today, the Biden-Harris administration takes another step forward in our drive to deliver student debt relief to borrowers who’ve been failed by a broken system. These latest steps will mark the next milestone in our efforts to help millions of borrowers who’ve been buried under a mountain of student loan interest, or who took on debt to pay for college programs that left them worse off financially, those who have been paying their loans for twenty or more years, and many others. The Biden-Harris Administration made a commitment to deliver student debt relief to as many borrowers as possible as quickly as possible, and today, as we near the end of a lengthy rulemaking process, we’re one step closer to keeping that promise.”

In April, the Administration released its first set of draft rules that proposed authorizing the Secretary of Education to grant student debt relief to tens of millions of borrowers across the country, including those whose balances have grown due to runaway interest and those who entered repayment on their loans a long time ago, among others.

If these rules are finalized as ED has proposed, they would authorize the Secretary of Education to provide partial or full debt relief to the following groups of borrowers:

1. Borrowers who owe more now than they did at the start of repayment

Borrowers would be eligible for relief if they have a current balance on certain types of Federal student loans that is greater than the balance of that loan when it entered repayment due to runaway interest. ED estimates that this debt relief would impact nearly 23 million borrowers, the majority of whom are Pell Grant recipients.

2. Borrowers who have been in repayment for decades

If a borrower with only undergraduate loans has been in repayment for more than 20 years (received on or before July 1, 2005), they would be eligible for this relief. Borrowers with at least one graduate loan who have been in repayment for more than 25 years (received on or before July 1, 2000) would also be eligible.

3. Borrowers otherwise eligible for forgiveness but have not yet applied

If a borrower has not successfully enrolled in an income-driven repayment (IDR) plan but would be eligible for immediate forgiveness, they would be eligible for relief. Borrowers who would be eligible for closed school discharge or other types of forgiveness but haven’t successfully applied would also be eligible for this relief.

4. Borrowers who enrolled in low-financial value programs

If a borrower attended an institution that failed to provide sufficient financial value, or failed one of the ED’s accountability standards for institutions, those borrowers would also be eligible for relief.

These new rules would also authorize relief for borrowers across the country who have struggled with the burden of student loan debt. ED expects that all four of these proposed forms of relief would be provided to eligible borrowers without requiring any action from borrowers, meaning no application would be needed.

FREQUENTLY ASKED QUESTIONS

Does this legislation affect programs like Public Service Loan Forgiveness (PSLF)?

This ruling does NOT affect programs like Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness (TLF), or income-driven repayment (IDR). The PSLF program was established under the College Cost Reduction and Access Act of 2007, and the Teacher Loan Forgiveness (TLF) Program was created by the Higher Education Amendments of 1998.

Are there are other opportunities for relief?

Teacher Loan Forgiveness

Public Service Loan Forgiveness (PSLF)
Federal Perkins Loan Teacher Cancellation

Military Service Benefits

Total and Permanent Disability Discharge

IDR Forgiveness

Past Student Loan Developments within the Biden-Harris Administration

SAVE Plan Court Actions (Sept. 2023)

A federal court issued an injunction preventing ED from implementing parts of the Saving on a Valuable Education (SAVE) Plan and other IDR plans. Further developments are possible while the SAVE Plan remains under litigation. Continue to check this page for more information as developments occurs. Please note that information related to IDR plans, including the SAVE Plan, may not be accurate at this time.

What the injunction means for borrowers:

Forbearance: Borrowers enrolled in the SAVE Plan have been moved into forbearance. During forbearance, SAVE borrowers will not have to make payments. The time in forbearance will not count toward Public Service Loan Forgiveness or income-driven repayment (IDR) loan forgiveness. SAVE borrowers will not accrue interest on their loans during the forbearance. SAVE borrowers will be notified about their forbearance by their loan servicers.

Bills and payments: Borrowers enrolled in the SAVE Plan who received a bill for August are being put in an interest-free forbearance – payments are not required during forbearance. Borrowers enrolled in the SAVE Plan who did not receive a bill for August have also been put in forbearance and therefore will not receive a bill.

Supreme Court Strikes Down Biden Student Loan Debt Relief Plan (June 2023)

On June 30, 2023, the Supreme Court ruled 6 to 3 against the Biden-Harris Administration’s student debt relief program. Biden’s one-time federal student loan debt relief would’ve given eligible borrowers a full or partial discharge of federal student loans up to $20,000. This ruling does NOT affect programs like Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness (TLF), or income-driven repayment (IDR). It also does not affect the IDR Account Adjustment, which ended June 30, 2024.

The June 30th Supreme Court decision was related to the Higher Education Relief Opportunities for Students Act of 2003, or “HEROES Act”, which President Biden invoked in August 2022 to launch his administration’s debt relief program. The PSLF program, however, was established under the College Cost Reduction and Access Act of 2007. It is an entirely different program that allows government and non-profit employees to have their remaining loan balances forgiven after 120 qualifying monthly payments while working full-time for a qualifying employer.

What’s next?

The Federal Student Aid’s website updated its homepage with a brief announcement:

“The Supreme Court has issued a ruling on whether we can move forward with our student debt relief program. We are reviewing the Court’s decision to determine next steps…. We will post more information as soon as updates are available.”

The Supreme Court’s decision effectively starts the countdown to the end of the federal student loan payment pause. Payments and interest were already set to resume 60 days after the Supreme Court issued its ruling on Biden’s Student Debt Relief plan, or 60 days after June 30. Student loan interest began accruing September 1, 2023, and payments restarted October 1, 2023. The administration is pursuing a “Plan B” and has initiated the rulemaking process under the Higher Education Act. For more information on other actions the Biden administration and Department of Education are pursuing, click here.

How the SAVE Plan Works

Income-based repayment plans have long existed within the U.S. Department of Education. However, the Biden-Harris Administration is proposing a rule to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers.

The rule would:

Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. This is down from the 10% available under the most recent income-driven repayment plan.
Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment.
Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.
Cover the borrower’s unpaid monthly interest, so that, unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.