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The Biden administration is moving ahead with a new path to student loan cancellation for Americans who face steep medical bills, child care costs and other types of financial hardship that prevent them from repaying their loans.
Announced Friday, the proposed rule is President Joe Biden’s third attempt at student loan cancellation as he faces repeated legal challenges from Republican states. His first plan was rejected by the Supreme Court last year, and his second plan has been temporarily halted by a federal judge in Missouri.
The new rule would have to clear a number of hurdles before it becomes official, and it’s unclear if it could be realized before Biden leaves office in three months. Like Biden’s other loan forgiveness proposals, it could face court challenges from conservatives who say it’s unconstitutional and unfair.
If finalized, the new rule would allow the Education Department to proactively cancel loans for borrowers if the agency determines they have an 80% chance of being in default on their loans within two years. Others could apply for a review to determine if they meet the criteria for cancellation.
It’s meant to help borrowers who are unlikely to ever be able to repay their loans. The Education Department estimates about 8 million Americans would qualify for cancellation.
„For far too long, our broken student loan system has made it too hard for borrowers experiencing heartbreaking and financially devastating hardships to access relief, and it’s not right“, said Education Secretary Miguel Cardona.
Those who could be eligible include people with unexpected medical bills, high child care costs, heavy costs related to caring for relatives with chronic illnesses, and those struggling financially in the wake of natural disasters, the Education Department said.
