Who May Qualify for Student Loan Forgiveness Under Biden’s New HEA Plan

The Education Department has released critical new details on a new student loan forgiveness program that is being developed at the direction of President Biden.

The new debt relief plan will be implemented under the Higher Education Act (HEA). This is a different statute from the one that the administration relied on for its first student loan forgiveness plan, which the Supreme Court struck down in June 2023. Officials hope that this new plan has stronger legal footing. However, it is widely expected to be challenged in court once it is finalized.

Here is the latest information.

New HEA plan: Background

Last month, the department released key initial information outlining the scope of the new program, focusing on five primary groups of borrowers who could qualify for student loan forgiveness. 

Then this week, in advance of negotiated rulemaking hearings scheduled for later in December, the department published updated draft regulations that provide more details on who could be eligible for student loan forgiveness and what that relief may ultimately look like. 

“The Biden-Harris Administration has already secured a total of $127 billion in debt relief for 3.6 million borrowers through a variety of actions, but we know there are so many hardworking Americans and families out there who still need help,” said U.S. Secretary of Education Miguel Cardona in a statement on Monday.

“Student loans are supposed to be a bridge to a better life, not a life sentence of endless debt. This rulemaking process is about standing up for borrowers who’ve been failed by the country’s broken student loan system and creating new regulations that will reduce the burden of student debt in this country.”

U.S. Secretary of Education Miguel Cardona

Types of student loans that could qualify for student loan forgiveness

The Education Department’s draft regulations indicate that officials are trying to make the new student loan forgiveness program as broad as possible in terms of the types of federal student loans that are covered. If the program moves forward in its current form, most types of federal student loans — including Direct loans, FFEL loans, Perkins loans and HEAL loans — could qualify.

“The Secretary [of Education] may waive all or part of any debts owed to the Department arising under the Federal Family Education Loan Program authorized under title IV, part B, of the HEA, the William D. Ford Federal Direct Loan Program authorized under title IV, part D, of the HEA, the Federal Perkins Loan Program authorized under title IV, part E, of the HEA, and the Health Education Assistance Loan Program authorized by sections 701–720 of the Public Health Service Act, 42 U.S.C. 292–292o, under the conditions included in, but not limited to, §§ 30.81 through 30.90,” reads the draft regulatory text.

This differs from Biden’s first student loan forgiveness plan, which was limited to Direct loans only.

5 Groups of borrowers who could benefit from student loan forgiveness 

The draft regulations released this week by the Education Department continue to focus on several specific categories of borrowers who could qualify for student loan forgiveness. These groups include:

• Borrowers whose current federal student loan balances are higher than the original balances when the loans first entered repayment. This could be due to interest accrual during periods of non-payment or low payments under income-driven repayment plans or fees and penalties associated with prior defaults. 
• Borrowers whose federal student loans first entered repayment 20 or 25 years ago. The updated draft regulations indicate that this would apply to those with undergraduate federal student loans that first entered repayment during or before 2005, while those with graduate school loans that entered repayment during or before 2000 could be eligible.
• Borrowers who have not yet applied for student loan forgiveness programs. Those who qualify for other federal student loan forgiveness programs, such as IDR forgiveness or Public Service Loan Forgiveness, but have not applied can benefit from this.
• Borrowers who attended programs or institutions that “failed to deliver sufficient financial value.” In the updated draft regulations, the Education Department provided more information about what this means. It pointed to a school’s closure or loss of federal student aid eligibility or its failure to comply with the department’s formal accountability standards (such as a new Gainful Employment rule) as possible reasons why a borrower could qualify for relief under this prong.

The Education Department also maintained that it continues to consider a fifth category of borrowers who could qualify for student loan forgiveness based on financial hardships. However, the department has declined to release draft regulations for this group, as the negotiated rulemaking committee continues to debate what may constitute a “hardship” for the purposes of the program. 

“While the Department is not providing proposed regulatory text related to defining hardship for borrowers, the Department will consider ways to pursue relief for this category of borrowers and has dedicated time to address this issue during the December session,” according to the Education Department’s statement.

Amounts of student loan forgiveness under new Biden plan

For the first time, the Education Department provided details about the amounts of student loan forgiveness that borrowers could qualify for under the new program, depending on the applicable category.

Up to $10,000 in forgiveness

Borrowers who qualify for student debt relief under the first prong — those whose current federal student loan balances are larger than they were when they first entered repayment — could receive up to $10,000 in student loan forgiveness. 

Up to $20,000 in forgiveness

Lower-income borrowers and those enrolled in the new Saving on a Valuable Education (SAVE) plan could qualify for up to $20,000 under this prong. 

Full loan balance canceled

Federal student loan borrowers in the next three categories could be eligible to have their full loan balance canceled. This is similar to how federal student loan forgiveness works for related programs, including income-driven repayment, Public Service Loan Forgiveness (PSLF), Borrower Defense to Repayment and the Total and Permanent Disability (TPD) discharge program.

Undecided relief for some borrowers

Since the department has not released draft regulations for the final group of borrowers who could qualify for student loan forgiveness based on hardship, it is not clear if the department anticipates providing full or partial relief. 

Final rulemaking session on Biden’s new student loan forgiveness plan

The Education Department is hosting a third and final round of negotiated rulemaking on December 11 and 12, 2023. At these sessions, a committee of stakeholders will convene, discuss the draft regulations, and try to reach consensus (full agreement) on key aspects of the plan. 

If the stakeholder committee can find consensus on elements of the draft regulations, the department will work to finalize those elements. On aspects of the plan that do not reach consensus, the department will finalize regulations unliterally, while factoring in the committee’s discussion.

The administration will publish final regulations for the program later in 2024, and the public will have further opportunity to submit comments. After that, the new student loan forgiveness will go forward. However, it may not be available to borrowers until 2025 — which, notably, is after the 2024 elections.