What Biden’s Education Secretary says Californians could expect about student debt relief
President Joe Biden’s administration is pushing ahead on sweeping student loan forgiveness for more than 25 million Americans this fall.
The administration has already begun notifying those who may qualify for potential federal debt relief — targeting people with runaway interest or those who have been paying back loans for decades, mainly low-income individuals.
U.S. Department of Education Secretary Miguel Cardona said in a one-on-one interview with The Bee that continuing to work on federal student debt cancellation was “common sense” and having people owe more than they took out to go to college was “criminal.”
“It’s common sense, first of all, that you shouldn’t have to be sentenced to life in payment for a loan that you took out to help make yourself, invest in yourself, to make your community better. That just doesn’t make sense to me,” Cardona said. “I also believe it’s a national security issue. The more we have an educated workforce, the more we’re able to compete.”
Beginning this week, the Education Department is emailing federal borrowers about the potential relief. Anyone who does not want it must notify their student loan servicer by Aug. 30. If someone opts out, they can’t opt back in.
The Education Department plans to send more information this fall. Even if a borrower is emailed about the relief now, it does not automatically mean they qualify — assuming the rule can go into effect as written. It still isn’t finalized, and it could be held up by anticipated Republican lawsuits.
If it can be implemented, eligible borrowers don’t have to take any action to have either partial or full debt erasure, Cardona said.
This early email, prefacing relief before the rulemaking process is complete, suggests the administration will move swiftly to wipe debt once it is finalized.
Quick implementation might be crucial to the administration’s effort, given Republican-led lawsuits over the past couple of years have held Biden from delivering on some federal student debt forgiveness plans.
In 2022, Biden announced a wide-ranging plan to forgive up to $20,000 in debt for borrowers who received a federal grant meant for low-income students and up to $10,000 for borrowers who earned below a certain income. The plan relied on an emergency relief statute, with the administration citing coronavirus pandemic hardships.
GOP-led states sued, claiming the president overreached his authority and that the plan would injure student loan servicers. In 2023, the Supreme Court agreed that Biden couldn’t implement the plan.
Last month, amid Republican states’ legal action, a federal court temporarily halted Biden’s new income-driven repayment plan that allowed many enrollees cheaper or zero monthly payments and quicker routes to debt cancellation. An income-driven repayment sets monthly payments intended to be affordable based on someone’s income and family situation.
New directions
Since the Supreme Court overruled the Biden administration’s sweeping debt cancellation plan, officials have been working on a new pathway for broad student forgiveness.
The administration released its first set of draft rules for this upcoming relief plan in April. If carried out as planned, relief would likely come shortly before the November election.
Republicans called this an election-year ploy in the race between Vice President Kamala Harris, the likely Democratic presidential nominee after Biden dropped out, and former President Donald Trump.
“The Biden-Harris administration continues to dangle loan ‘forgiveness’ in front of millions of borrowers across the nation,” House Education and Workforce Committee chairwoman Virginia Foxx, R-N.C., said in a statement Wednesday. “This is just another illegal scheme intended to buy votes in November, and it will do nothing to address the student loan disaster that Biden-Harris has exacerbated.”
Cardona said that he hopes Republican congressional lawmakers discuss why they don’t support student debt forgiveness with constituents in August, while they are in their home states rather than on Capitol Hill in Washington D.C.
“We anticipate that our Republican friends are going to try to block it or sue it,” Cardona said of the plan. “But now that they have plenty of time — they’re on recess, our folks from the Hill — I invite them to meet with their constituents to communicate why they think it’s not important that they receive debt relief.”
Who could benefit?
Despite roadblocks, the Biden administration has so far canceled about $168 billion in federal student loan debt for almost 4.8 million borrowers, including for people working in public service, on income-driven repayment plans or who were defrauded by for-profit colleges.
If this rule can go into effect as written, Cardona said the number of borrowers made eligible for student debt relief during this administration will balloon to over 30 million.
Full or partial relief under the potential rule would go to the following people, according to the Education Department:
▪ Borrowers who owe more now than they did at the start of repayment due to interest, which the Education Department estimates impacts almost 23 million borrowers. “It’s almost criminal to see that people who have paid over $200,000 in debt for loans that were $60,000 are still being asked to pay loans,” Cardona said.
▪ Borrowers who have only undergraduate loans and have been paying on them for over 20 years and borrowers with at least one graduate loan who have been paying for more than 25 years, which the Education Department anticipates affects 2.6 million people.
▪ Borrowers who are eligible for relief under an income-driven repayment plan, a closed-school discharge or other opportunities, but have not applied for it yet.
▪ Borrowers who enrolled in low-financial value programs — an institution that failed to provide sufficient value or didn’t meet the department’s accountability standards.
Cardona said that the Education Department has put almost $15 billion back into California’s economy through the administration’s debt relief efforts.
“These are educators that are now getting debt relief and putting money back into the local economy, buying a home or starting a small business, or helping their children go to college,” Cardona said. “Those are the stories that I’m hearing.”
This story was originally published August 1, 2024 at 5:06 PM with the headline "What Biden’s Education Secretary says Californians could expect about student debt relief."
