The U.S. Dept. of Education unveiled a preliminary version of new federal regulations that lay the groundwork for a second attempt at providing relief to student loan borrowers. This proposal primarily addresses individuals considered highly susceptible to financial hardship, with a specific focus on those burdened by excessively high debt or constrained by extremely low incomes, making it improbable for them to ever fully repay their loans, according to The Associated Press.
While comprehensive details are still forthcoming and may take several months to be finalized, the department's intention is to potentially alleviate some or all of the student debt for the following categories of borrowers: those whose outstanding loan balances surpass their original borrowed amounts; individuals who initiated loan repayments 25 or more years ago; those who utilized loans to pursue career-training programs that resulted in unmanageable debt or insufficient income; and those who qualify for other loan forgiveness programs but haven't yet submitted applications.
It’s clear that this plan is formulated for a specific group of borrowers that are the most burdened by student loans. This means that there is still a vast majority of student loans out there that were once eligible in the previous plan.
When the news broke, social media users were quick to express their displeasure and lack of faith in the President’s plan for those who voted him into office for the campaign promise surrounding overall student debt.
The Biden administration is moving toward a narrower student loan relief plan targeting specific groups of borrowers:
- borrowers whose balances exceed what they originally owed
- those with loans that entered repayment 25 or more years ago
- those who used loans to attend… pic.twitter.com/A5IeiZbf7d
— philip lewis (@Phil_Lewis_) October 31, 2023
Forgive it all. They have all that money for Ukraine and Israel. Give that money to your actual residents.
— Anti-Social (@UncleRob816) October 31, 2023
Biden initially called for a plan aimed at assisting "as many borrowers as possible." However, it appears that his administration is shifting away from the large-scale loan forgiveness promise made in August 2022, which was estimated to cost approximately $400 billion. The cost of the new proposal remains uncertain.
In a separate move, the Education Department took action to rectify errors made by a student loan servicing company that failed to deliver billing statements on time.
It is withholding $7.2 million in payments to MOHELA, the loan servicing company, after discovering that it failed to send timely billing statements to 2.5 million borrowers. Some borrowers received their bills less than a week before the due date, resulting in 800,000 borrowers falling behind on their payments.
To address this issue, the department instructed MOHELA to place all affected borrowers on forbearance, temporarily suspending their payments until the problem is resolved.
There is still a long way to go until a proper solution goes into effect for people who need financial assistance. It is unclear when the aid will come, how much of it will come and who will receive it.
Noumaan Faiz, (he/him) is a journalist and entertainer from Hayward, CA who covers culture and entertainment.
Edited by Nykeya Woods.