The White House isn’t abandoning the idea of debt relief before the November election for all those who feel pinched by student loan debt. The new proposal on how borrowers might finally have their balance forgiven was released by the federal Education Department, with just a few days to spare. This plan could help about 8 million of America’s citizens who are still paying for their loans.
While it was the last attempt the administration has to get this much-needed relief to millions of borrowers, it also makes logical sense that if Vice President Kamala Harris is elected, she will continue to push for measures to be passed to further increase loan cancellation.
The difference between this new proposal and previous ones is that this will hand the authority directly to the U.S. Secretary of Education. With this authority, the Secretary could alone immediately write off the debts of student loan borrowers who the government foresees will default on their loans within two years. This means, of course, that whatever parameters they might have to meet to be considered would have to be flexible, but you give the power to the Secretary of Education and you can have more things done to them as those parameters get changed.
This is not the only measure included in the new plan, though. They would create a new application that would allow those who are going through some types of ‘hardship’ to apply for forgiveness because your case is easier to present. As we both know, within the parameters, “hardship” is chronic illness, medical debt, child care costs, natural disaster expenses and so many other worthy causes. In the short and long term, these would cripple a borrower’s ability to pay their loans, and only speaking up about this before defaulting can save many grandchildren’s family finances.
Lael Brainard, the national economic adviser, was on board with this idea, pointing to strains of natural disasters that have weighed down families trying to stay afloat when, for example, the idea of worrying about student loans is just one stressor they do not want to add.
Brainard told the press, ‘We’ve just seen the kind of destruction people can experience when disasters like Hurricanes Helene and Milton come through.’ “When student debt repayment becomes an additional burden, at times like this, it just shouldn’t be.”
And as with all versions, Rep. Virginia Foxx, R-N.C., the outgoing head of the House education committee, is in sharp disagreement, calling the new plan a “blatant attempt to bribe voters” with eleven months to go before they head to the polls.
Prior attempts to cancel Student Loan Debt
It stands to reason that they would have created a new path to forgiveness, not to run through the same roadblocks the prior proposals by the administration have run into.
Saving on a Valuable Education (or SAVE), one of the prior attempts, is now in appellate court and oral arguments have already started. The Republican attorney general of Missouri, Andrew Bailey, said he thinks a ruling could come soon. For many of the borrowers that qualified for the proposal but have been in limbo for six months waiting for the trial, the verdict would put them out of their misery.
Deputy executive director of the Student Borrower Protection Center, Persis Yu, pointed out the administration’s good efforts of continuing its efforts to eliminate student loan debt, even as the coattails of the Republican party placed roadblocks at every turn to prevent it. “Right-wing Attorneys General have been continually attacking millions of working families with student debt and putting them further into debt for political points” over the last year,” Yu said.
Families of all political stripes are being hit by student loans, and only the cancellation of those debts could help the finances of many families currently struggling to get by.
FAQs
Q. What is the new student loan debt relief plan announced by the federal Education Department?
A. The new student loan debt relief plan, though, gives the U.S. Secretary of Education the ‘authority’ to forgive a student’s debts if they are deemed to have a higher than 90% probability of defaulting within two years. It also introduces a new deliberate application procedure for would-be individual loan forgiveness applicants with ‘hardship’ such as chronic illness, medical debt, child care expenses, or natural disaster exorbitance.
Q. Who will benefit from the new student loan debt relief plan?
A. That new plan may benefit up to about 8 million Americans who are currently repaying their student loans, either by forgiving debt or by making the application process easier for people struggling with finances.
Q. How does this new proposal differ from previous attempts at student loan debt relief?
A. Under the new plan, approximately 8 million Americans repaying their student loans at the moment could receive debt forgiveness or get a friendlier version of the application process for those scraping by financially.
Q. What types of hardships qualify for the new application for debt forgiveness?
A. Borrowing under various hardships will be able to apply for debt forgiveness in the new application. Chronic illness, medical debt, child care, natural disasters and other such expenses that significantly limit a borrower’s ability to repay their loans are qualified hardships.
Q. Why do some lawmakers oppose the new student loan relief plan?
A. Supporters of the plan, however, believe it’s actually a blatant attempt to bribe voters ahead of the elections. Respondents said to them they think the timing of the proposal is political and not simply oriented toward getting real relief for borrowers.