President Joe Biden announced on Friday that his administration is unveiling a new approach to address the issue of student loan forgiveness, aiming to assist as many Americans as possible. However, he acknowledged that the implementation of this plan will take longer than initially anticipated due to a recent Supreme Court decision that blocked his original forgiveness program.
According to the President, the new path toward providing student debt relief will prioritize aiding as many borrowers as possible and doing so in a timely manner. Biden emphasized that this approach aligns with the Supreme Court ruling by leveraging the Higher Education Act of 1965, a different law than the one previously proposed.
To facilitate this relief, Education Secretary Miguel Cardona, who was present alongside the President, will be empowered to “compromise, waive, or release loans under certain circumstances,” as stated by Biden.
In addition to the new path for debt relief, the administration plans to establish a temporary 12-month “on-ramp repayment program” designed to assist borrowers who will face challenging decisions when payments resume in October.
The purpose of this program is to prevent individuals from sliding further into financial distress when they are unable to make timely payments. Biden clarified that the on-ramp program is distinct from the student loan pause, as monthly payments will be due, bills will be issued, and interest will accumulate. He urged those who can afford to pay their monthly bills to do so, while assuring that the on-ramp will provide a safety net for those facing financial ruin.
To grant borrowers an opportunity to recover from missed payments, the Department of Education will refrain from referring them to credit agencies for a 12-month period, allowing them to regain financial stability, as stated by Biden.
