President Joe Biden will announce his latest effort to broaden student loan relief next week for new categories of borrowers, according to three people familiar with the plans, nearly a year after the Supreme Court foiled his administration’s first attempt to cancel debt for millions who attended college.
Still, the effort seeks to make good on President Biden’s promise after the Supreme Court struck down his initial plan in June, a $400 billion proposal to cancel or reduce federal student loan debt that a majority of justices said required congressional approval. President Biden called that decision a “mistake” and “wrong.”
“This new path is legally sound,” President Biden said in June. “It’s going to take longer, but, in my view, it’s the best path that remains to providing for as many borrowers as possible with debt relief.” Among those targeted for help are individuals whose unpaid interest has snowballed beyond the size of the original loan. The proposal would reset their balances back to the initial balance by erasing up to $10,000 or $20,000 in interest, depending on a borrower's income.
Those who are eligible for other types of cancellation but haven't applied would automatically get relief. It would apply to Public Service Loan Forgiveness and Borrower Defense to Repayment, programs that have been around for years but require infamously difficult paperwork.