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Student-Loan Borrowers Await Next Steps for Debt Cancellation

Photos from Google

After the Supreme Court turned down President Joe Biden’s first try at broad student debt relief, the Education Department is moving on to the next step in the ongoing story of student loan forgiveness. The new changes require a longer process under the Higher Education Act of 1965, which includes sessions where rules are discussed. Even with the loss, the Education Department is still committed to getting help to millions of borrowers as soon as possible. Education Secretary Miguel Cardona has stressed the need for new rules to fix the problems with the country’s student loan system.

Photos from Google

The Road to Relief

Because the Supreme Court ruled against them, the Education Department will hold its last negotiations on December 11 and 12 to write the final text for forgiving student loans. The Education Department is focusing on helping borrowers who are having a hard time. An updated draft text describes possible solutions for five groups of borrowers.

This proposed action for borrowers targets particular categories of persons. This would provide an extra $20,000 for persons with high balances under income-based repayment program. Additional assistance of up to $10,000 is suggested for these borrowers whose balances exceed what each borrower originally owed.

The suggested relief plan also includes people whose loans were paid off at least 20 years ago and those who can get help through income-driven repayment plans or other targeted programs.


Negotiations and Legal Safeguards

When negotiators meet in December to talk, the suggested relief groups will be at the center of their discussions. There is wording in the draft text that is probably meant to protect the Education Department from possible legal challenges. This is especially true when it comes to repaying agencies that hold discharged borrower accounts.

Consensus within the committee is very important after the talks. If the goal is met, the Education Department will make the draft rules official and release them. This will allow the public to give feedback that could change the final version.

The suggested rule for forgiving student loans will be released by the Education Department in May 2024. It could go into effect by July 1, 2025, unless the education secretary chooses to go ahead with an earlier date.


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