The Biden Administration Adopts a More Targeted Approach to Student Loan Relief

by Andrew Wright
targeted student loan relief

The Biden Administration is refining its strategy on student loan relief, opting for a more targeted approach that focuses on particular borrower groups rather than the more expansive plan previously struck down by the Supreme Court in June. On Monday, the Department of Education unveiled a draft of new federal regulations, setting the stage for another attempt to ease the burden of student loans. This renewed initiative specifically aims to assist borrowers who are deemed particularly vulnerable, such as those with exorbitant interest rates or minuscule incomes that render full repayment improbable.

While complete details are still pending, the Department of Education has signaled its intention to forgive part or all of the student loans for specific categories of borrowers. These include individuals whose loan balances have surpassed the original amounts, those whose loans entered the repayment phase 25 or more years ago, and borrowers who acquired loans for career-training programs that resulted in either unreasonable debt or inadequate income. Additionally, it will target individuals who qualify for other loan forgiveness programs but have not applied. A fifth category under discussion focuses on borrowers experiencing financial hardship that current loan systems inadequately address.

“Committed to remedying the flaws in our nation’s fractured and cost-prohibitive student loan infrastructure, President Biden and I aim to ensure that student debt does not become an insurmountable obstacle to opportunity,” stated Education Secretary Miguel Cardona.

The original plan by President Biden was more inclusive, offering up to $20,000 in federal student loan forgiveness for individuals earning less than $125,000 annually or couples earning less than $250,000. However, this proposal was turned down by a majority-conservative Supreme Court, prompting the Department of Education to revisit the legal foundations of their approach.

The revised proposal seeks to address some of the most pressing issues contributing to the escalation of student debt. Among these are the accumulation of interest that exceeds the original loan amounts, the plight of borrowers who attended for-profit colleges with poor performance metrics, and the challenges facing older borrowers with longstanding loans.

As the draft proposal undergoes federal rulemaking processes, it will continue to be revised based on public feedback to be collected next year. The proposed regulations would empower the Department of Education to entirely cancel federal loans for borrowers falling under some of these categories. For example, for individuals who began repayments more than 25 years ago, the department may waive the remaining loan balance, effectively leading to complete loan cancellation.

The new initiative is not without its critics, particularly among Republicans who argue that such loan forgiveness places an undue burden on taxpayers. This attempt is based on the Higher Education Act of 1965, which gives the Secretary of Education the authority to waive, compromise, or release certain debts, though the extent of this authority remains a contentious legal issue.

Before the new rules are enacted, they will be subject to review by a diverse committee composed of stakeholders including students, college officials, loan servicers, state officials, and advocates such as the NAACP. The committee is scheduled to convene next week, with meetings set to continue until December. Following deliberation, if consensus is achieved, the department will proceed with the proposal. If not, the agency will put forth its own plan subject to a public comment period.

Despite President Biden’s earlier pledges for more sweeping debt cancellation, it appears that the Administration is gravitating towards a more constrained form of relief. The cost of the previous plan was estimated to be around $400 billion, whereas the financial implications of this revised approach are yet to be determined.

In related news, the Department of Education is withholding $7.2 million in payments to the student loan servicer MOHELA for failing to send timely billing statements to 2.5 million borrowers. As a corrective measure, all affected borrowers have been placed under forbearance until the issue is rectified.

Federal student loan repayments resumed this October, marking the first such resumption since the pandemic began. Industry insiders caution about possible disruptions as loan servicers, often understaffed, reintegrate millions of borrowers back into the repayment systems.

This report is produced by The Big Big News education team, supported by the Carnegie Corporation of New York. The AP retains sole responsibility for the content.

Frequently Asked Questions (FAQs) about targeted student loan relief

What is the key change in the Biden Administration’s new approach to student loan relief?

The Biden Administration is shifting from a broad-based approach to a more targeted strategy that focuses on specific groups of vulnerable borrowers. The new proposal aims to assist those with exorbitant interest rates, those who have been in the repayment phase for more than 25 years, and others.

What categories of borrowers will the new targeted approach focus on?

The new targeted approach will focus on five categories of borrowers: those whose loan balances exceed the original amount, those who began loan repayments more than 25 years ago, those who acquired loans for career-training programs that resulted in unreasonable debt or inadequate income, those eligible for other loan forgiveness programs but who haven’t applied, and a fifth category that targets those experiencing financial hardship inadequately addressed by the current system.

What is the legal foundation of the new draft proposal?

The new draft proposal is grounded in the Higher Education Act of 1965, which gives the Secretary of Education the authority to compromise, waive, or release certain types of debt. However, the extent of this authority is currently a topic of legal debate.

Will the public have an opportunity to comment on the new proposal?

Yes, the Department of Education plans to collect public feedback on the draft proposal next year as it undergoes federal rulemaking processes.

What happened to President Biden’s original student loan relief plan?

President Biden’s original plan was broader in scope and aimed to cancel up to $20,000 in federal student loans for individuals with annual incomes below $125,000 or couples earning below $250,000. However, this plan was rejected by a conservative majority in the Supreme Court, prompting a revised approach.

What are the financial implications of this new targeted approach?

The financial impact of the new targeted approach is yet to be determined. The original broad-based plan was estimated to cost around $400 billion.

Is the new plan facing any opposition?

Yes, the plan is likely to face opposition, particularly from Republicans who argue that loan forgiveness poses an unfair burden on taxpayers.

Who will review the new federal rules before they are enacted?

Before the new rules can be enacted, they must be reviewed by a diverse committee made up of stakeholders such as students, college officials, loan servicers, state officials, and advocacy groups like the NAACP.

What corrective measures have been taken for the loan servicer MOHELA’s failure to send timely billing statements?

The Department of Education is withholding $7.2 million in payments to MOHELA and has ordered the servicer to put all affected borrowers into forbearance until the issue is resolved.

Have federal student loan payments resumed?

Yes, federal student loan payments resumed in October for the first time since the onset of the pandemic. Industry insiders have cautioned about potential disruptions as loan servicers reintegrate millions of borrowers back into repayment systems.

More about targeted student loan relief

You may also like


DaveyS October 31, 2023 - 4:11 am

400 billion for the original plan?! Where’s that money gonna come from. At least with targeted relief, maybe they’ll spend less? But who knows, really.

TomL October 31, 2023 - 5:03 am

MOHELA messed up big time, glad they’re being held accountable. but what about other servicers? Are they ready for this?

JeremyP October 31, 2023 - 5:31 am

don’t get why they didn’t just go with the original plan. sounds like they’re tryin to please everybody but end up helping fewer people.

RonK October 31, 2023 - 8:16 am

Finally, someone’s addressing the real issues behind student loans. But I wanna know what the GOP has to say about this, they’re gonna fight it for sure.

NinaO October 31, 2023 - 11:39 am

Interesting to see how they’ll actually define ‘financial hardship’ and ‘unreasonable debt’. Those terms can be subjective, you know?

Tina87 October 31, 2023 - 7:22 pm

Public feedback next year? By then, so many could be deep in debt already. Govt needs to speed up the process, just sayin.

AnnieG October 31, 2023 - 9:52 pm

Older borrowers finally get some attention! bout time we talked about people who’ve been paying for decades, not just the new grads.

MikeJ October 31, 2023 - 11:07 pm

Wow, so Biden’s changing the game plan huh? Seems like a good move, coz the last one didn’t fly. targeted is good, but how will they decide who’s vulnerable?

Elle_M October 31, 2023 - 11:27 pm

Legal gray areas, committees, public feedback…seems like a whole lot of red tape. But, let’s see if this actually happens. Fingers crossed.

SamanthaQ November 1, 2023 - 1:12 am

Well, its about time they focused on the people who are really struggling. Those interest rates are insane, but whats the cutoff? 25 years seems random to me.


Leave a Comment


BNB – Big Big News is a news portal that offers the latest news from around the world. BNB – Big Big News focuses on providing readers with the most up-to-date information from the U.S. and abroad, covering a wide range of topics, including politics, sports, entertainment, business, health, and more.

Editors' Picks

Latest News

© 2023 BBN – Big Big News