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The Education Department is in the final stage of finalizing a debt-relief plan for borrowers facing financial hardship.
Andrew Caballero-Reynolds/AFP via Getty Images
Student loan borrowers and their advocates have urged the Biden administration in public comments to implement its final effort to provide student debt relief, fearing what could happen during the next Trump administration.
“Cancel all student debt before Trump reverses everything,” one commenter wrote.
This latest plan is geared toward people facing financial hardship. The Biden administration received more than 14,000 comments on the proposal before the comment period ended Monday, though fewer than 600 were publicly posted Tuesday afternoon. Officials at the Education Department must read and respond to those comments before finalizing the rule—the last step before borrowers could see debt relief.
But with only six weeks to go until President Biden leaves office, it’s unlikely that the administration will finalize the rule. If the department does manage that task, legal challenges are expected. Plus, any rule issued in the final days of the Biden administration could—as the commenter noted—be rolled back by President-elect Trump or Congress.
Opponents, including Republican lawmakers, say the administration doesn’t have the authority to grant debt relief in this manner, and that the plan is both unfair and expensive.
The hardship proposal, released in October, is likely the Biden administration’s last effort to provide borrowers with some form of relief. The president had loftier ambitions to forgive up to $20,000 in student loans for 43 million Americans, but the federal courts stymied his plans. This plan is aimed at helping borrowers who have financial burdens that prevent them from repaying their loans and would benefit about eight million borrowers, two-thirds of whom received the Pell Grant, federal financial aid for low-income students, according to the department.
“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,” Education Secretary Miguel Cardona said in a statement about the proposal.
To determine whether borrowers are experiencing financial hardship, the department would take into account their age, high cost burdens for essential expenses such as health care, and outstanding balances, as well as whether they completed college or receive means-tested public benefits. Borrowers who are 80 percent likely to default in the next two years would automatically see all or some of their balances wiped out, but others could also apply for relief.
The plan is estimated to cost taxpayers $112 billion over 10 years, according to the proposed regulations. The Committee for a Responsible Federal Budget estimated the plan will cost considerably more—about $600 billion over a decade.
A group of trade associations representing student loan lenders and servicers said in a comment that the proposal was “vague, ambiguous, and untethered to statute” and would lead to confusion among borrowers.
“Ambiguity allows whipsawing policies and disparate borrower treatment, depending on political winds and administrations,” they wrote. “Regulations should be definitive guidelines that borrowers and those that advise them can rely on and plan around. We urge the department to reconsider such vaporous language and craft a proposal that can withstand judicial scrutiny and that borrowers can understand and rely on.”
Borrowers who submitted public comments said the proposed relief would be a long-awaited lifeline, sharing stories about how student loan debt has affected their lives.
“We have filed bankruptcy twice and have two special-needs kids,” Kristin Logsdon wrote. “Our student loan debt feels like a forever chain of hardship that we can never escape from nor climb out of.”
An anonymous commenter whose partner was recently diagnosed with stomach cancer wrote that without the hardship provision, “we will go on with income-based repayments for years, never making a dent and looking at a potential tax bomb after chipping away for multiple decades.”
Borrowers pleaded with Biden to take action to cancel student loans before he leaves office.
“The incoming administration will do absolutely nothing to help and Republicans have already proved they will work against borrowers receiving any assistance,” one commenter wrote. “He should use the presidential power and immunity he has been given to act immediately.”
Critics Weigh In
The hardship proposal builds on a plan released earlier this year that provided a pathway to relief for borrowers who owe more than they initially borrowed or who have spent more than 20 years paying back their loans, among other categories. But that plan, which provided relief for 28 million Americans, is on hold following a court order.
As with other debt-relief proposals, several commenters took issue with the latest version, arguing that it’s unfair to taxpayers who didn’t go to college and fails to address the root causes of student debt.
“If this kind of ‘aid’ passes, it’ll lead to more overpriced education, inequality in who benefits, inflationary pressure, and plain unfairness,” wrote a commenter who went by the name Brock. “My family worked hard to put ourselves through college. We ate cheap food, skipped going out, and sacrificed for our education. Measures like the one proposed will only stoke resentment among the truly hardworking people in this country.”
In its comment, the Defense of Freedom Institute for Policy Studies, a conservative think tank, called on the department to withdraw the proposal, pointing to the results of the election and arguing that the education secretary lacks the authority to “engage in the mass cancellation of any loan debt.”
“After nearly four years of rulemaking, the Department’s regulatory agenda regarding student loan relief is in tatters,” DFI wrote. “Americans can only hope that future administrations—no matter their partisan or ideological affiliation—will make a more faithful effort to respect the rule of law and limits of administrative rulemaking than did the political appointees currently in the executive branch."
