Biden Administration Unveils New Regulation Proposal for Student Loan Forgiveness Based on Hardship
The Biden administration has introduced a new proposal aimed at providing federal student loan forgiveness to borrowers facing financial hardship. This regulation would authorize the Secretary of Education to waive some or all of the federal debt for those unable to repay due to significant hardship or when collection efforts outweigh the financial benefits of repayment.
The proposal includes 17 factors that may indicate hardship and guide eligibility. These factors include:
- Household income
- Assets
- Type of loans and debt balance
- Current repayment status and history
- Total student debt balance and payments relative to income
- Total debt balances relative to income
- Receipt of Pell Grant and FAFSA information
- Type and level of educational institution attended
- Outcomes of attended programs
- Federal financial assistance received for postsecondary education
- Borrower’s age
- Disability
- Age of loans (from first disbursement date)
- Receipt of means-tested public benefits
- Essential costs (e.g., healthcare, caretaking)
- Potential for hardship to persist
- Any other hardship indicators identified by the Secretary
Eligible borrowers may qualify for relief through two main pathways:
- Automatic Forgiveness: Borrowers identified as at least 80% likely to default may have their debt automatically forgiven.
- Application-Based Forgiveness: Individual cases will be reviewed to assess hardship on a case-by-case basis.
Implementation Timeline and Next Steps
The proposal is set to enter a 30-day public comment period in the Federal Register before finalization, with an anticipated implementation date in 2025. This regulation follows the Supreme Court’s 2023 decision to block a broad student loan forgiveness plan, marking a continued effort by the administration to explore alternative debt relief avenues.
