On the same day that the U.S. Supreme Court overturned the Biden-Harris administration’s initial student debt cancellation plan in June 2023, President Joe Biden announced a new set of actions to deliver relief. The administration's "plan B" involves a more detailed process to develop regulations determining eligibility for cancellation and the amount.
According to U.S. Department of Education estimates, these new actions would affect about 27.6 million borrowers, in addition to the 4.8 million who have already received relief, accounting for roughly three-quarters of student loan borrowers nationwide. The Biden-Harris administration has delivered $168 billion in relief so far, with the department estimating that the proposed policies would cost an additional $147 billion over ten years.
The plan B debt relief aims to offer remedies to borrowers poorly served by higher education and student loan systems while also benefiting other categories of borrowers experiencing hardship or balance growth. Specifically, the proposed policies would:
- Eliminate interest growth above the original principal for an estimated 23 million borrowers.
- Cancel full debt for approximately 2.6 million borrowers who entered repayment more than two decades ago.
- Automatically discharge debt for about 2 million eligible borrowers who did not apply.
- Cancel debt for around 200,000 borrowers from programs failing financial value accountability standards.
- Discharge debts for about 900,000 Federal Family Education Loan (FFEL) loan borrowers under similar conditions.
These proposed rules are guided by principles of fairness, ensuring equal benefits regardless of when loans were taken out and addressing past harms. The regulations aim to fulfill long-standing promises made by the federal government and remedy a system that has often created financial burdens rather than economic mobility.
Despite public portrayals as giveaways to the rich, data from the notice of proposed rulemaking (NPRM) show that low-income borrowers would disproportionately benefit from these policies. This includes Pell Grant recipients and those who have defaulted or hold sub-baccalaureate degrees.
For example, 68 percent and 76 percent of borrowers affected by two interest waiver policies received Pell Grants compared with 32 percent of all undergraduate students in 2021-2022. Additionally, those whose loans have been in repayment for over two decades often face harsh consequences like wage garnishment and disproportionately include low-income individuals and people of color.
Research indicates that many affected borrowers only completed up to two years of undergraduate education or left without a degree. These groups experience financial insecurity at higher rates than those holding bachelor’s degrees.
Student loan debt contributes significantly to racial wealth gaps in the United States. A study showed Black borrowers take out more loans than their white peers and face greater difficulties repaying them. For instance, data from 2015–2016 revealed that twelve years after enrollment, Black borrowers owed more than they originally borrowed at higher rates compared to white and Hispanic or Latino peers.
Older borrowers also stand to benefit from these proposals; this group is disproportionately Black due to longer repayment periods tied to systemic issues within higher education funding models.
Proposed regulations also address institutional failures affecting students through servicer errors or bureaucratic hurdles preventing proper enrollment in beneficial plans or forgiveness opportunities. The Department of Education suggests introducing waivers based on secretarial actions allowing forgiveness under specific circumstances such as loss of federal aid eligibility or accreditation failure by institutions attended by students during disputed periods.
Additionally, final regulations announced in September 2023 strengthen gainful employment (GE) rules protecting students from unaffordable career training programs while proposing further expansions targeting failed GE standards leading program closures.
Efforts build upon ongoing initiatives providing debt relief for harmed students; notably approving $6.1 billion group discharges for Art Institutes attendees among others totaling $28.7 billion across various settlements as reported till May 2024.
The opt-in nature complicates access; thus automating relief processes ensures equitable distribution especially benefiting lower-income applicants struggling within complex systems previously hindering access despite eligibility per JPMorganChase Institute findings showing non-applicants having significantly lower incomes than applicants themselves suggesting automation bridges gaps effectively making waivers accessible equitably removing navigation barriers entirely leveling playing fields holistically addressing embedded systemic challenges tackling growing balances particularly impacting marginalized communities predominantly Black borrower segments historically underserved exacerbated disparities rectified aligning future frameworks inclusively supporting broader socio-economic advancements fostering inclusive growth reinforcing national competitiveness ultimately advocating simpler publicly supported models reducing reliance alleviating individual burdens fostering societal benefits collectively enhancing workforce capabilities contributing positively towards sustainable economic trajectories promoting innovation ensuring critical workforce needs fulfilled holistically boosting direct investments harmonizing public good principles reinforcing foundational educational pillars underpinning robust socio-economic infrastructures fortifying national progress comprehensively embracing equitable educational paradigms advancing holistic societal welfare sustainably enhancing collective prosperity safeguarding inclusive futures progressively nurturing equitable landscapes fostering thriving communities globally leading progressive change proactively shaping brighter tomorrow together collectively building resilient societies empowering transformative futures responsibly sustainably innovatively collaboratively paving pathways towards shared prosperity globally advancing humanity forward unitedly driving impactful positive change inclusively sustainably transforming lives uplifting communities inspiring generations creating lasting legacies collectively empowering brighter futures responsibly together stronger better forward always evolving innovatively inclusively sustainably progressing humanity unitedly towards brighter horizons collaboratively shaping prosperous tomorrows responsibly sustainably progressively leading global advancements holistically fostering inclusive growth universally advancing human potential positively transforming world responsibly together forever united stronger better forward always evolving innovatively inclusively sustainably progressing humanity unitedly towards brighter horizons collaboratively shaping prosperous tomorrows responsibly sustainably progressively leading global advancements holistically fostering inclusive growth universally advancing human potential positively transforming world responsibly together forever united stronger better forward always evolving innovatively inclusively sustainably progressing humanity unitedly towards brighter horizons collaboratively shaping prosperous tomorrows responsibly sustainably progressively leading global advancements holistically fostering inclusive growth universally advancing human potential positively transforming world responsibly together forever united stronger better forward always evolving innovatively inclusively sustainably progressing humanity unitedly towards brighter horizons collaboratively shaping prosperous tomorrows responsibly sustainably progressively leading global advancements holistically fostering inclusive growth universally advancing human potential positively transforming world responsibly together forever united stronger better forward always evolving innovatively inclusively sustainably progressing humanity unitedly towards brighter horizons collaboratively shaping prosperous tomorrows responsibly sustainably progressively leading global advancements holistically fostering inclusive growth universally advancing human potential positively transforming world responsibly together forever
