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President Joe Biden has announced a new student loan forgiveness plan that will provide "significant relief" for Black and Latino borrowers, according to the White House.
On Monday (April 8), the Biden administration unveiled his "Plan B" for debt cancellation after the U.S. Supreme Court struck down his original program, per theGrio.
"Plan B" includes five methods to "fix" the student loan forgiveness program, including providing relief for borrowers who owe more today than when they initially started paying off their loans, those who have owed for 20 years or more, and borrowers experiencing financial hardship.
The Biden administration expects that over 30 million Americans will benefit from the new plan, including Black borrowers who historically rely more heavily on student loans and take longer to pay them off than their white counterparts.
“We know there are big racial disparities in the student loan program, and students of color are more likely to borrow larger amounts and are more likely to struggle to repay [their loans],” U.S. Under Secretary of Education James Kvaal said in a statement.
Kvaal noted that "Plan B" will have a “positive impact on the racial wealth gap."
“Most Black borrowers owe more 10 years out of school than they originally borrowed because of interest outstripping payments,” he said. “We need to bring relief to everyone who’s struggling with their student loans.”
Existing federal programs have already canceled $140 billion in student loan debt for four million borrowers, according to the administration.
Additional features of the new plan announced Monday include adding debt relief eligibility for borrowers who went to institutions that “failed accountability measures” or “failed to provide students with sufficient financial value.” Some institutions have been accused of preying on borrowers and not offering programs that lead to gainful employment.
Debt relief for those experiencing hardship will cover borrowers who experienced health care costs or other “unusual family expenses.”
“We have a number of programs to cut payments or offer loan forgiveness for people who are struggling to afford their loans for any number of reasons,” Kvaal said. “But there are still a lot of people who slip in between these programs and are struggling on their loans. The hardship is intended to give us the flexibility to help additional people who really need it.”
Before Plan B is rolled out, it will have to go through the federal rule-making process in which the public will be able to provide comments on the proposed program before it becomes policy. The legal framework of the new plan is under the Higher Education Act. Biden's original program was proposed under the HEROES Act, which was a response to the economic hardships of COVID-19.
According to Kvaal, the Biden administration seeks to finalize the new program and “begin delivering relief to students” by the fall.
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