The Biden administration is pursuing an alternative approach to student loan debt cancellation.
The Education Department has announced a new plan to provide debt cancellation to potentially five groups of student borrowers. This plan involves a formal regulatory process that will begin in October, with a panel of negotiators meeting over several months to reach a consensus. The targeted groups include borrowers with balances greater than their original loans, those whose loans entered repayment decades ago, attendees of programs with insufficient financial value, eligible borrowers not applying for relief under income-driven repayment programs, and borrowers facing financial hardship inadequately addressed by the current system.
This new plan is the second attempt for broader federal loan forgiveness. The previous plan would have forgiven up to $10,000 in federal student loans for most eligible borrowers and up to $20,000 for Pell Grant recipients.
This announcement comes as student loan payments are set to restart on October 1 for the first time since the onset of the COVID-19 pandemic. Many had hoped that a government shut down would prevent repayment but that has been confirmed not to be the case.