The Biden administration’s efforts to erase student debt for the 46 million Americans with college loans have repeatedly encounters legal obstacles. Today, the Department of Education is rolling out a new plan that could provide debt relief for 8 million borrowers who are suffering financial hardship.

The new plan, revealed The deal as of Friday would provide loan relief for about 8 million people with student loans who are suffering financial hardship caused by other debts, ranging from medical bills to costs due to a natural disaster. The Education Department said the proposed rules would be published in the Federal Register in the coming weeks and that it expected to finalize them in 2025.

President Joe Biden has made debt relief for people with student loans a key policy issue of his 2020 campaign, but Republican-led states have filed lawsuits to block many of these efforts, while the Supreme Court in 2023 ruled 6-3 against his plan to erase up to $20,000 in debt for millions of borrowers.

At the same time, Americans hold more than $1.7 trillion in student loans, debt that has compromised their ability to save or buy a home, among other problems.

“For too long, our student loan system has made it too difficult for borrowers facing hardship, often financial, to access relief,” Department of Education Miguel Cardona said in a call with journalists. “It’s not fair, it’s not right, and it’s not who we are as Americans.”

How people would get relief

Under the proposal, borrowers could benefit from debt relief in two ways. Some people with student loans could qualify for no-application forgiveness, with the Education Secretary offering one-time relief to borrowers who the agency says have an 80% chance of defaulting within two years , Cardona said.

“One of the main reasons we fight for student debt relief is to address the more than 1 million defaults we see each year in the student loan system,” he said. declared.

The second route to loan relief would be loan forgiveness once borrowers complete an application, with the department evaluating 17 factors such as the applicant’s overall debt balance, household income and whether their loan payments student loans prevent them from being able to afford basics like housing or health care. .

“College financing is supposed to help students climb the economic ladder, not bury them in a ditch,” Cardona said.