Trying again: Education Department pitches new debt relief proposals
Natalie Schwartz and Laura Spitalniak
October 25, 2024
The proposal is the Biden administration’s most recent attempt to enact widespread loan forgiveness before his presidency ends in January.
The U.S. Department of Education announced a new set of proposed rules on Friday that would provide debt relief for borrowers who are unable to repay their loans due to financial hardship, such as expenses stemming from natural disasters or unexpected medical bills.
The department is proposing two ways for borrowers to receive loan forgiveness under the plan.
Under the first pathway, the Education Department would provide automatic relief to borrowers whom it determines to have at least “an 80% chance of being in default within the next two years.” The agency would consider factors like a borrower’s assets, household income versus debt balances, and Pell Grant recipient information in its analysis. It estimates that two-thirds of the borrowers eligible for this first pathway would be Pell Grant recipients.
