On Friday, the Biden administration rolled out its latest approach to tackle student loan debt, targeting relief for millions of borrowers facing potential financial default. This move comes as other significant student debt relief efforts remain stalled in the courts.
The proposed initiative aims to provide relief for borrowers who are at high risk of defaulting due to financial hardship. According to the Department of Education, the plan could cancel debt for up to 8 million individuals, at an estimated cost of $112 billion.
The relief program introduces two paths to forgiveness. The first path involves automatic debt cancellation for borrowers who, based on an internal assessment, have at least an 80% likelihood of defaulting within the next two years. This assessment would rely on Department of Education data, meaning borrowers would not need to apply for this one-time forgiveness option.
For those who do not qualify for automatic forgiveness, a second option is available. Borrowers can apply for relief, with the government conducting a “holistic” assessment based on various factors, including income, debt levels, disability status, and even the type of institution attended. The intent, officials noted, is to focus forgiveness on cases where repayment may be unrealistic, thereby minimizing the government’s collection costs.
“Servicing and collecting on defaulted loans — it’s not free,” said Education Secretary Miguel Cardona. “It costs taxpayer dollars, and it can harm borrowers.”
This latest proposal is part of a formal rulemaking process under the Higher Education Act, which could take several months to finalize. However, it remains uncertain whether a future administration would support the plan.
The initiative has received praise from advocates, who argue that existing law grants broad authority to the education secretary to forgive debts, especially in cases of extreme financial hardship. Mike Pierce, executive director of the Student Borrower Protection Center, called the plan “necessary” and “overdue.”
Legal challenges remain a persistent hurdle. The Biden administration’s previous efforts at student debt cancellation, including a sweeping plan struck down by the Supreme Court in 2023, have faced repeated legal setbacks from Republican-led states. Most recently, a new relief proposal intended to assist nearly 30 million borrowers was halted by a federal court after a lawsuit led by Republican attorneys general.
Although the administration has clarified that the latest plan is legally distinct, it is expected to face similar opposition. Kevin Carey, a director at New America’s education policy program, expressed doubts about the program’s viability in court, citing concerns over the logistical complexity of evaluating large volumes of applications. “This is either very naive or very cynical,” Carey said. “The department might be counting on the judiciary to stop them.”
The ongoing legal battles come amid a wider policy clash over student debt, with borrowers and advocates continuing to push for broad-based relief. In the meantime, around 8 million borrowers enrolled in Biden’s SAVE repayment plan remain in limbo, as legal disputes keep their loans frozen.
