Biden's student loan forgiveness Plan B zeroes in on eligibility: Here's who could qualify

The Biden administration is zeroing in on its alternative plan to provide millions of Americans student debt relief.

That plan, announced after the Supreme Court struck down the president's original strategy for mass forgiveness, uses a process known as negotiated rulemaking, or "neg reg," to secure the relief.

In this case, the department is exploring changes to federal higher education law that would enable more borrowers to have their loans discharged. It's meant to build off the forgiveness options available to certain borrowers through programs such as income-driven repayment and borrower defense to repayment, in which former students who attended predatory or low-value programs are relieved of their debt.

As part of this neg reg process, it became clear earlier this month that mass loan forgiveness on the scale of Biden's original plan would be unlikely. On Monday, the department underscored that rather than mass forgiveness it will focus on five targeted populations, including those whose balances now exceed the amount they originally borrowed and those who graduated with unreasonable amounts of debt.

Student loan forgiveness, Plan B: Large-scale student loan debt cancellation likely off the table in President Biden's new attempt

The Education Department announced it had developed draft regulations for most of those categories, also releasing an issue paper meant to guide forthcoming discussions among negotiators for the fifth category. That category entails borrowers who are facing various hardships not covered by existing forgiveness options.

The draft text, published by POLITICO, proposes one-time full or partial relief for borrowers whose loan balances exceed the amount originally taken out and for those who’ve been in “repayment” status for at least 25 years. The document includes questions for negotiators to discuss, such as which borrowers would be eligible for the outsize-balance relief.

The rule also proposes that borrowers can become eligible for relief moving forward if their program fails the department’s new gainful employment rule. The proposed rule also specifies how to define and increase accountability for low-value programs, partly by measuring how much graduates’ debt compares to their income.

Narrower student loan forgiveness plan could still affect many borrowers

President Joe Biden's original plan would have helped the overwhelming majority of the nation’s 43.5 million people with student loan debt. Administration officials said the ideas shared Monday, if realized, would still reach a large number of borrowers.

The proposals outlined in the documents, which haven't been publicly released, will be shared with the committee's negotiators ahead of their next meeting, which kicks off Nov. 6.

“President Biden and I are committed to helping borrowers who’ve been failed by our country’s broken and unaffordable student loan system,” U.S. Secretary of Education Miguel Cardona said in a statement. “These draft proposals would build on the historic $127 billion in loan forgiveness the Biden-Harris administration has already approved for nearly 3.6 million borrowers. We are fighting to ensure that student debt does not stand in the way of opportunity or prevent borrowers from realizing the benefits of their higher education.”

For advocates and borrowers looking for more, however, even that sum has been a disappointment, a Biden campaign promise gone unfulfilled.

The negotiators were selected to represent various constituencies, including different kinds of borrowers, various types of higher education institutions and servicers.

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The department, with the committee's help, will continue to refine the draft rules after the next two-day meeting for discussion at the third session happening December 11 and 12. Once they are officially published next year, the public will be able to submit written comment.

If the committee isn't in agreement about a proposal, the Education Department can craft its own plan.

Those who wish to provide public testimony may do so via this link.

Who could be the targets of student loan forgiveness now?

More specifically, the Education Department said borrowers who could be affected include those who:

• Have been paying on their loans 25 or more years;

• Because of interest, have federal student loan balances that are more than the amount they originally borrowed to attend college;

• Borrowed money to attend career-training programs that created “unreasonable debt loads” or didn’t result in enough income for graduates, or attended colleges that have what the Education Department called “unacceptably high” student loan default rates.

• Are eligible for plans that align payments to income, are eligible for Public Service Loan Forgiveness because of their jobs or closed school loan discharges, but they haven’t applied for any of these options; and

• Have a financial hardship the student loan system doesn’t already address. When the committee considering student debt relief met earlier this month, these borrowers came up. One example included people with chronic illnesses.

Contact Alia Wong at (202) 507-2256 or awong@usatoday.com. Follow her on X at @aliaemily.

This article originally appeared on USA TODAY: Student loan forgiveness update: Biden's Plan B gets more detailed