The Biden administration is advancing a new proposal to cancel student loans for individuals facing financial challenges, notably those with substantial medical or child care expenses. The proposal, announced Friday, marks Biden's third endeavor to address student debt despite persistent legal confrontations from Republican states. His initial plan was thwarted by the Supreme Court, and the second has stalled pending judicial review in Missouri. The new proposal would let the Education Department to forgive loans preemptively if it determines a borrower has an 80% likelihood of defaulting within two years.
The initiative targets approximately 8 million Americans who are less likely to repay their debts. Eligibility factors include unforeseen medical expenses, high child care costs, and the financial burden of caring for ill relatives. Education Secretary Miguel Cardona remarked, "For far too long, our broken student loan system has made it too hard for borrowers experiencing heartbreaking and financially devastating hardships to access relief, and it's not right." Cardona says about 1 million borrowers default every year, and the move would free his agency from trying to recoup money it's unlikely to ever see.
"Servicing and collecting on defaulted loans is not free, it costs taxpayer dollars," Cardona said. "And there's a point when the cost of trying to collect on a defaulted loan just is not worth it." A 30-day public comment period has begun; should the proposal become official, it would happen in 2025. (This story was generated by Newser's AI chatbot. Source: the AP)
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