WASHINGTON (NEWSnet/AP) — President Joe Biden’s latest plan for federal student loan cancellation now has formal proposal status, giving him a chance to deliver on a 2020 campaign promise ahead of the Nov. 5 election.

The Education Department filed paperwork Tuesday for a new regulation that would deliver the cancellation that Biden announced last week.

It still has to go through a 30-day public comment period, along with another review, before it can take effect.

 

This is a more targeted proposal than the one the U.S. Supreme Court rejected last year.

The new plan is based on a different law; and with that, seeks to cancel or reduce loans for more than 25 million Americans. The Democratic president highlighted the plan last week, detailing five categories of people who would be eligible for help.

The paperwork filed by the Education Department includes four of those categories. 

Those categories are:

  • Borrowers who owe more than they originally took out because of runaway interest. It would eliminate up to $20,000 in interest for anyone in that situation, and some who are using income-driven repayment plans would get all interest erased with no maximum limit. Eligible borrowers will see this update automatically.
  • People who have been paying back their undergraduate student loans for at least 20 years, and those who have been paying graduate loans at last 25 years. Their loans would be canceled.
  • Those who attended colleges or programs now considered to have low financial value, such as a program that has proven to leave graduates with large shares of debt compared to income. These loans would be automatically canceled.
  • Borrowers known to qualify for other federal forgiveness programs, but who haven’t applied, would also get loans erased. Federal education officials would use existing data to identify those people. 

The proposal was negotiated over the course of several hearings as part of a federal rules process. The discussions included input from students, college officials, state officials, borrower advocates and loan servicers.

During the hearings, advocates pushed for another category of forgiveness for people who have hardship cases that prevent them from being able to repay their loans, such as high medical or caregiving costs. The Education Department said it's working on the details of the financial hardship option, with a proposal to come “in the coming months."

The Biden administration said it plans to start implementing some parts of the latest proposal as soon as this fall.

Republicans are staunchly opposed to broad student loan cancellation, saying it’s an unfair bailout for people who went to college.

Two coalitions of Republican states have sued the Biden administration to block the already enacted SAVE repayment plan that offers an accelerated path to loan forgiveness.

But the White House says it’s confident the newer outline is on solid legal ground, saying the Higher Education Act gives the education secretary the power to waive student loans in certain cases.

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