President Biden has announced a new student loan forgiveness plan! Find out more about who can have access to this benefit!

President Joe Biden unveiled a new student loan forgiveness plan on Monday, supplementing his administration’s existing relief initiatives and potentially aiding tens of millions of borrowers. This “Plan B,” is narrower in scope compared to the initial one, which was blocked by the Supreme Court. It focuses on five distinct groups of borrowers. Here’s who eligible to this benefit:

1. Borrowers with ‘Runaway Interest’ Debts

Acknowledging that over 25 million borrowers face ballooning federal student loan balances due to accumulated interest, Biden’s plan offers a solution. Eligible borrowers may qualify for forgiveness of up to $20,000 in unpaid interest, irrespective of income. Additionally, low- and middle-income borrowers enrolled in income-driven repayment plans could see their entire accrued interest erased automatically.

2. Borrowers Eligible for Forgiveness Programs, Who Haven’t Applied

Recognizing the complexity of accessing existing forgiveness programs, Biden’s initiative aims to simplify the process. Borrowers eligible for programs like Public Service Loan Forgiveness or income-driven repayment plans, yet haven’t applied, could have their debts canceled through automatic review by the Department of Education.

3. Long-term Repayers

Approximately 2.5 million borrowers burdened with student loans for over two decades would benefit from forgiveness. Those with undergraduate debt from before July 1, 2005, and graduate debt from before July 1, 2000, could qualify for relief, encompassing both direct and consolidated loans.

4. Relief for Students of ‘Low-Value’ Institutions

Addressing concerns regarding the quality of education received, Biden’s plan extends forgiveness to graduates of “low-value” colleges or programs. This provision aims to aid those who attended institutions failing to provide substantial educational benefits, such as those shut down or disqualified from federal aid programs due to malpractices.

In a similar move, the Education Department has already discharged federal student loans for over a million borrowers who went to certain for-profit institutions, such as Corinthian Colleges and ITT Technical Institute.

5. Assisting Borrowers in Hardship

For borrowers facing significant life challenges hindering loan repayment, Biden’s plan offers relief. This component targets those at risk of default or grappling with expenses like medical debts or childcare responsibilities. Notably, the plan prioritizes aiding Black and Latino borrowers disproportionately burdened by student debt.

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