The Biden administration on Wednesday announced it will begin moving forward with next steps in canceling student loan debt for tens of millions of borrowers this fall.
This week the Education Department will start emailing borrowers who have at least one federal student loan with an update on the potential student loan debt forgiveness available to them under the rule changes being finalized this fall.
It is the latest move in an a massive effort by President Biden to wipe out billions in student loan debt. The administration has already canceled more than $168 billion in debt for some 4.8 million borrowers.
The rules if finalized would bring the total number of borrowers eligible for student loan debt cancelation to more than 30 million, including those who have already had debt wiped out since Biden took office.
The Education Department estimated the changes would cost $150 billion, but an estimate by the Committee for a Responsible Federal Budget put it between $250 billion to $750 billion.
Critics argue the administration is unfairly burdening taxpayers with a massive transfer of debt, and some Republicans have even accused the president of trying to buy votes ahead of the November election.
The Education Department will provide additional information to borrowers once the rules are finalized, but the emails this week will let borrowers know they have until August 30 to opt out if they do not want the upcoming forgiveness.
‘Today, my Administration took another major step to cancel student debt for approximately 30 million Americans,’ Biden said in a statement.
‘By providing more information to borrowers on how they can take advantage of our upcoming debt relief programs, borrowers will be prepared to benefit swiftly once the rules are final,’ he continued.
‘Despite attempts led by Republican elected officials to block our efforts, we won’t stop fighting to provide relief to student loan borrowers, fix the broken student loan system, and help borrowers get out from under the burden of student debt.’
In April, the Biden administration announced a set of rules giving the Education Secretary the ability to cancel student loan debt for tens of millions of borrowers.
It was part of the administration’s ongoing effort using the lengthier rulemaking process after the Supreme Court in June 2023 blocked their original $400 billion plan to cancel debt for some 40 million borrowers.
The rules if finalized would impact multiple groups of borrowers including those who owe more on their loans now than when they started repaying them due to additional interest piling up. The administration estimated this change would impact nearly 23 million borrowers.
The rules also address borrowers who have been in repayment for decades. Those who have been paying undergraduate loans for more than 20 years would be eligible as well as those with graduate loans who have been in repayment for at least 25 years.
Other rules deal with borrowers who are eligible for loan forgiveness under other plans but have not yet applied such as the Income Driven Repayment (IDP) plan and for those who were enrolled in programs that were deemed to be of low-financial value for not meeting Education Department standards.
For borrowers who do want to opt out of student loan forgiveness under the rules being finalized, they will have to contact their student loan servicer. The Education Department said those borrowers will not be able to opt back in.
The latest steps by the Biden administration this week come after an appeal court earlier this month blocked the implementation of the administration’s separate Saving a Valuable Education (SAVE) Plan.
The 8th Circuit Court of Appeals in Missouri blocked all aspects of the plan from going forward for now. It is not yet clear whether the court will issue a final ruling in the case.
The ruling was in response to one of two lawsuits filed by more than a dozen Republican-led states in response to the Biden administration launching the SAVE Plan last summer.
The SAVE plan was expected to lower payments for millions of borrowers while those who had been in repayment were expecting to see debt wiped out after ten years.
More than eight million borrowers had enrolled in the program, according to the White House. Some 400,000 borrowers had already had debt forgiven under the plan.
After the ruling, the Education Department said borrowers who were enrolled in the SAVE Plan would be put in interest-free forbearance until the legal case was resolved.