Biden administration announces new plan to cancel student debt

The new plan is an effort to fulfill a promise that President Biden made as a candidate in 2020.

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A new plan to cancel student debt could help 30 million borrowers. The plan announced by the Biden administration could forgive some or all debt.

The plan amends an earlier version that the Supreme Court ruled against about a year ago.

“It means freedom from feeling like your student loan bills compete with basic needs like grocery or health care,” Miguel Cardona, U.S. Education Secretary, said.

The new plan “offers targeted relief to specific groups of borrowers, notably those who’ve carried debt for many years, and those struggling to make payments. And many borrowers, regardless of income, could see relief from high interest balances,” NPR reported.

The new plan is an effort to fulfill a promise that President Biden made as a candidate in 2020.

The plan breaks borrowers down into four categories:

  • borrowers who owe more money than at the start of their repayment
  • borrowers who started paying 20 or more years ago
  • borrowers who are eligible for existing loan forgiveness or discharge programs
  • borrowers facing economic hardship

According to the new plan, “low and middle-income borrowers who are enrolled in an income-driven repayment plan would have all of their interest forgiven” includung single borrowers earning $120,000 or less a year, or married borrowers who make $240,000.

The Biden administration said that the new plan will forgive a portion of interest for 25 million people, while 23 millions will receive full forgiveness of their interest. If eligible, cancellation would be done automatically.

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