President Biden is making attempts to cancel more student debt before his term ends, as he faces prolonged challenges in his effort to erase billions of dollars in student loans. Recently, the Department of Education released a rule that extends the deadline for borrowers to sign up for long-term repayment plans, allowing borrowers more time to enroll in programs that could lead to loan forgiveness.
This new provision modifies the Income Contingent Repayment (ICR) plan, extending the enrollment deadline from July 2024 to July 2027. However, these new regulations will not take effect until July 2026, which means that the incoming administration could potentially halt these debt cancellation efforts.
This announcement comes on the heels of another rule proposed by the Biden administration, which would allow for one-time student loan forgiveness for borrowers deemed likely to default based on certain data. Moreover, Biden’s administration also recently declared plans to forgive $4.5 billion in student loans for over 60,000 public service workers.
During his 2020 campaign, Biden committed to forgiving significant student debt but has encountered multiple legal hurdles in delivering on that promise. His initial plan included forgiving up to $10,000 for individual borrowers and $20,000 for Pell Grant recipients, estimated to cost taxpayers over $400 billion. However, in a ruling issued in June 2023, the Supreme Court blocked these loan cancellation plans, stating the Education Secretary lacks the authority to eliminate over $430 billion in student debt.
Despite setbacks, Biden attempted a second plan aimed at providing further relief to millions of borrowers, proposing to cancel debts for those who have been repaying student loans for two decades or more and easing the burden for individuals owing more than they borrowed.
Looking ahead, President-elect Trump has not laid out his exact strategy regarding student loan forgiveness. However, he has indicated a desire to reform the entire education system, and his former Education Secretary, Betsy DeVos, has argued that Biden’s proposals should be reassessed. DeVos emphasized that if taxpayers are financing student loans, there must be effective oversight and management of the process, suggesting the reintroduction of private lending as a critical component of the education financing landscape.
