Under the new Biden plan, student loan forgiveness may commence as early as October.

The Biden administration plans to introduce a new student loan forgiveness program this October, potentially benefiting up to 25 million borrowers. Eligible recipients could receive significant debt relief, possibly without needing to apply. However, legal challenges are expected, similar to other Biden administration student loan initiatives currently facing lawsuits. Here’s an overview of who would qualify:

1. Borrowers experiencing high interest burdens post-repayment could receive $20,000 or more in forgiveness.
2. Those eligible for forgiveness under existing programs (like income-driven repayment or Public Service Loan Forgiveness) but haven’t enrolled.
3. Undergraduate borrowers in repayment for at least 20 years, and graduate borrowers in repayment for at least 25 years.
4. Borrowers who previously attended programs with poor outcomes or ineligible for federal aid.

Up to 25 million borrowers could potentially qualify for student loan forgiveness solely based on excessive interest burdens, as estimated by Education Department officials. Additionally, more borrowers could meet the criteria under the other three outlined categories.

As per the Biden administration’s Unified Agenda for Spring 2024, the final rule for this initiative is slated for publication in October, although the exact date remains unspecified. While new Education Department regulations typically take effect on July 1 of the following year, there’s a possibility of early implementation to expedite relief, similar to the administration’s approach with the Saving on a Valuable Education (SAVE) plan.

The new plan emphasizes automatic student loan forgiveness wherever feasible, sparing many borrowers from having to submit individual applications. This approach extends to those eligible under existing programs, with the Education Department leveraging its National Student Loan Data System for streamlined processing based on repayment start dates and other relevant data.

However, plans for hardship-based student loan forgiveness appear unlikely to be finalized by October. Although the Education Department has published draft regulations for the initial four categories, the timeline for hardship-based relief remains separate and uncertain.

Biden’s new student loan forgiveness program is expected to encounter legal challenges soon after the final rules are published in October.

In his initial attempt at widespread student debt relief, Biden faced multiple legal challenges that resulted in the program being blocked before any borrowers received forgiveness. These lawsuits ultimately reached the Supreme Court, where a conservative majority, in a 6 to 3 decision last summer, struck down the initiative.

The Biden administration is now aiming for firmer legal ground with its latest forgiveness plan. While the first program was based on the HEROES Act of 2003, which the Supreme Court ruled did not authorize mass forgiveness, the new plan relies on a provision within the Higher Education Act allowing the Secretary of Education to “compromise” or “waive” federal student loan obligations.

However, challengers are expected to argue that this provision should be narrowly interpreted and that Congress never explicitly authorized mass student loan forgiveness. Similar arguments were raised by Republican-led states in challenges against Biden’s previous forgiveness plans and continue in ongoing lawsuits against the SAVE plan. Additionally, a recent Supreme Court ruling has made it generally harder for federal agency regulations to withstand legal scrutiny by overturning long-standing precedents.

The upcoming election will also play a crucial role in the fate of the forgiveness program. A return to the White House by former President Donald Trump would likely lead to the suspension of Biden’s latest student loan forgiveness efforts.