The Biden administration on Thursday proposed a new avenue to determine who can qualify for student debt relief.
The draft plan, announced by the Education Department, would have the federal government considering which challenges would prevent certain borrowers from paying their loans when determining if a person is eligible for student loan forgiveness, according to The Associated Press.
The government would consider if a borrower has a disability or “high-cost burdens for essential expenses,”— such as paying for health care or caring for a loved one – in deciding on loan relief.
According to the Education Department, the suggested regulation would bring automatic relief – up to the entire outstanding federal student loan – for borrowers who are highly likely to be in default in two years.
Should the department implement the new draft guidelines, it could forgive the student debt of hundreds of thousands of borrowers, the DOE said. However, the administration could not identify how many borrowers the proposal could impact.
In addition to the list of factors, including age, disability and repayment history, the proposed regulations state that “any other factors of hardship identified by the Secretary” may also be considered.
It’s unclear if borrowers would be eligible for relief automatically or if they would have to apply for the relief.
The proposals are scheduled to be discussed next week when the panel of federal rule-makers meets to debate the details.
The draft text was meant to be as expansive as possible within the limits of the law and the court decision, a senior administration official told the AP. The official briefed reporters on conditions they not be identified.
The plan is the latest in a series of moves the administration has implemented since the U.S. Supreme Court ruled that President Joe Biden overstepped his authority when he initially attempted to cancel up to $20,000 for an estimated 43 million people with incomes under $125,000. Biden asked the Education Department to craft a new plan under a different legal basis.
A plan announced by Biden in July aims to adjust how the Education Department calculates certain student loan payments. The adjustments were being made, the department said, to correct past errors in counting payments and the result would show that borrowers made payments that were not counted correctly toward their debt.
In November, around 813,000 borrowers were notified that their loans had been forgiven under the Education Department’s one-time account adjustment.
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