Student-loan borrowers are officially one step closer to benefiting from Biden's second attempt at debt cancellation after a key stage of the process wrapped up

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Student-loan borrowers are officially one step closer to benefiting from Biden's second attempt at debt cancellation after a key stage of the process wrapped up
President Joe Biden announced the cancellation of an additional $1.2 billion in student loan debt for about 153,000 borrowers. Irfan Khan / Los Angeles Times via Getty Images
  • The Education Department concluded its fourth negotiation session for student-debt relief on Friday.
  • The final session centered on a relief category for borrowers facing financial hardship.
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President Joe Biden's Education Department is officially one step closer to finalizing its second attempt at student-loan forgiveness for federal borrowers.

On February 22 and 23, the department met with stakeholders to negotiate which borrowers should be eligible for debt relief under the Higher Education Act of 1965. It marked the fourth — and final — negotiation session.

It's been a long process to reach that point. After the Supreme Court struck down Biden's first attempt at debt relief at the end of June, the Education Department announced the same day it would be pursuing another avenue for relief under the HEA. However, in contrast to Biden's first attempt, the HEA requires the administration to undergo negotiated rulemaking: a lengthy process involving negotiations and periods of public comment before the relief can be implemented.

Beginning in October, the department shared its proposals for student-debt relief with the negotiating committee, and at the conclusion of the third session in December, it had identified five categories of borrowers it sought to include for debt cancellation.

However, Democratic lawmakers, advocates, and even some of the negotiators themselves expressed disappointment with the department's omission of a category for borrowers experiencing financial hardship. The department ended up agreeing to hold a fourth negotiation session to discuss just that, and it brought to the table a series of factors — like household income and repayment history – it was considering to determine whether a borrower qualified for hardship relief.

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During the sessions, both the negotiators and representatives of the Education Department agreed that it was best to avoid coming to too narrow of a hardship definition. "Hardship is different for everybody," Tamy Abernathy, the department's negotiator, said. "If we narrowly define hardship, we'll most definitely miss" some borrowers who need relief.

Along with the economic hardship discussion, the department proposed in previous negotiation sessions additional areas for relief, including borrowers who have balances greater than what they owed when they entered repayment, borrowers who entered repayment over 20 years ago and have not received relief, and borrowers who are eligible for relief under programs like income-driven repayment and Public Service Loan Forgiveness but have not yet applied.

Abernathy also specified that borrowers with parent PLUS loans — a type of loan parents can take out to cover up to the full cost of attendance of their child's education — will be included in this relief. It's significant given PLUS loans are excluded from a range of federal benefits, including the new SAVE income-driven repayment plan.

What happens next

The Education Department will now work to finalize the text for its proposed version of student-debt relief. The text will either be the same language discussed during the negotiations, or the department can choose to change what was discussed in its final proposal.

Once the proposal is ready, the Education Department will publish it in the Federal Register, where the public will likely have 30 days to submit comments on the text. When the public comment period concludes, the department can choose to adjust its text based on any feedback it might have received from the comments.

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The department will then finalize the text of the rule to be implemented in July 2025, in accordance with the Higher Education Act's calendar.

This second attempt at student-debt relief is separated from the other targeted relief initiatives the Education Department has been in the process of carrying out. This summer, additional provisions of the SAVE plan will be implemented, including cutting payments for undergraduate borrowers in half.

The department also recently announced $1.2 billion in debt cancellation for 153,000 borrowers as a result of early implementation of SAVE provision that gives relief to borrowers who originally borrowed $12,000 or less and made as little as 10 years of qualifying payments.

During a February 21 speech touting the latest relief, Biden said he would continue to pursue loan forgiveness for federal borrowers despite legal challenges.

"Look, early in my term, I announced a major plan to provide millions of working families with debt relief for their college student debt. Tens of millions of people in debt were literally about to be canceled — their debts. But my MAGA Republican friends in the Congress, elected officials, and special interests stepped in and sued us. And the Supreme Court blocked it," Biden said.

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"But that didn't stop me," he continued. "I announced we were going to pursue alternative paths for student debt relief for as many borrowers as possible. And that's the effort that's been underway the last two years.

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