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Biden Proposes New Debt-Relief Plan After Supreme Court Rejects Initial Proposal

Biden Proposes New Debt-Relief Plan After Supreme Court Rejects Initial Proposal

Inside Higher Ed

Katherine Knott
June 30, 2023
President Biden proposed “a new path” for debt relief after the Supreme Court struck down his initial plan Friday.
It remains unclear how many people will benefit from the new plan, compared to the old one, which would have helped 40 million borrowers.
Details of the new plan:
  • The Education Department on Friday initiated “a regulatory process to provide debt relief, so we can help the working- and middle-class borrowers who need it most,” said Education Secretary Miguel Cardona. Biden, in his remarks, acknowledged that the process would be slower than the debt relief the Supreme Court rejected.
  • The department also on Friday “finalized our new income-driven repayment plan, Saving on A Valuable Education (SAVE), which will be the most affordable repayment plan in history. It will cut monthly payments to zero dollars for millions of low-income borrowers, save all other borrowers at least $1,000 per year and stop runaway interest that leaves borrowers owing more than their initial loan,” Cardona said.
  • And the Education Department created “a 12-month on-ramp transition period that will help ensure borrowers smoothly and successfully return to repayment without falling into delinquency or default.” Cardona said that borrowers who can make payments should do so, as payments will resume and interest will accrue, but the “on-ramp to repayment will help borrowers avoid the harshest consequences of missed, partial or late payments like negative credit reports and having loans referred to collection agencies.”
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