Biden administration looks to expand student loan forgiveness to those facing ‘hardship’

WASHINGTON — Americans who are struggling to repay federal student loans because of financial hardship could get some of their debt canceled under President Joe Biden’s latest proposal for widespread loan forgiveness.

Several categories of borrowers would be eligible for relief under Biden’s second try at widespread cancellation after the Supreme Court rejected his first plan last year. Those with older loans or large sums of interest are being targeted for relief, for example. On Thursday, the Education Department expanded its proposal to include those who face financial hardship.

The plan was expanded amid pressure from advocates and Democrats who said the proposal didn’t do enough for struggling borrowers who don’t fit into one of the other cancellation categories.

Whether any of the relief will materialize is a looming question as conservatives vow to challenge any attempt at mass student loan cancellation. The proposal is now going through a rulemaking process that’s expected to take months to finalize, and a legal challenge is almost certain.

Biden initially attempted to cancel up to $20,000 for an estimated 43 million people with incomes under $125,000. After the Supreme Court ruled he overstepped his authority, Biden asked the Education Department to craft a new plan under a different legal basis.

The new proposal is narrower, focusing on several categories of borrowers who could get some or all of their loans canceled.

Here’s what we know so far about who could be eligible for cancellation under the Biden plan:

Borrowers facing financial hardship could see relief under the newest proposal put forth by the administration. The proposed regulations include automatic relief, up to the entire outstanding federal loan balance, for borrowers who are considered highly likely to be in default in two years.

Additional borrowers would be eligible for relief under a wide-ranging definition of financial hardship, up to the outstanding balance of their loans. Those factors include but are not limited to a person’s relative loan balance and payments compared to their total income. Other considerations include whether a borrower has high-cost, unavoidable expenses such as paying for childcare or healthcare.

The administration said it could not provide an estimate on how many people might be eligible under the hardship proposal.

The draft text was meant to be as expansive as possible within the limits of the law and the court decision, according to a senior…