The Biden administration scrapped two plans for mass student loan forgiveness on Friday, marking a disappointing end to efforts to implement broad student debt relief. Authorities withdrew proposed regulations that would have allowed the implementation of these initiatives.

Both loan forgiveness plans would have paved the way for student debt relief for large swaths of student borrowers, including those who have experienced hardship. uncontrolled balance growth due to interest accumulationand people facing significant personal or financial difficulties. If these programs had been implemented, they could have benefited more than 30 million borrowers.

But given the ongoing legal battles over Biden’s student loan forgiveness initiatives — most of which have not gone well for the administration — as well as the transition to the Trump administration in January, officials have perhaps concluded that these plans were unlikely to come into effect, anyway. And by eliminating these programs before the Trump administration takes office next month, Biden officials could attempt to protect borrowers from potentially harmful actions and preserve relief for the future.

Here’s what borrowers should know.

Two Biden Student Loan Forgiveness Plans Could Have Benefited Millions

The Biden administration on Friday officially withdrew proposed regulations regarding two student loan forgiveness plans. The first was commonly referred to as “Plan B” in reference to Biden’s first massive debt relief plan, which would have provided $10,000 in loan forgiveness for most borrowers; the Supreme Court struck down that plan last year. “Plan B” would have targeted debt forgiveness for four large groups of borrowers, particularly those whose loan balances have ballooned over the years due to rampant interest accumulation. The plan also would have provided loan forgiveness to borrowers who attended a “low-value” school that did not meet federal standards, those who took out student loans more than 20 or 25 years ago, and people who qualified for Existing but never implemented loan forgiveness programs.

The second student loan forgiveness plan would have allowed relief for struggling borrowers. Much of the relief would have been implemented automatically under the plan based on a number of hardship “indicators” identified by the Department for Education; these would have included the borrower’s low income, other debt burdens, eligibility for other means-tested government programs, and disability status. Other borrowers would have been allowed to submit a request for individualized review.

But it has become clear over the past two months that these plans are unlikely to come to anything. “Plan B” student loan forgiveness remains mired in a legal battle and subject to an injunction preventing the Department of Education from moving forward with the program. And the hardship-based student loan forgiveness initiative wasn’t even going to be finalized until 2025, when Biden would no longer be in office.

Why Biden rolled back regulations for these two student loan forgiveness plans

There may be several reasons why the Biden administration decided to abandon the two student loan forgiveness plans. The most obvious reason is that they are unlikely to be implemented, given the ongoing legal battle and the new Trump administration.

But administration officials may have had broader reasons to formally withdraw the proposed regulations. Perhaps they wanted to prevent the incoming Trump administration from quickly rewriting the draft rules in a way that could hurt borrowers — for example, by imposing new restrictions on future student loan forgiveness. Additionally, by withdrawing the regulations before the Federal Court has made a final decision in the “Plan B” legal challenge, this lawsuit will likely become moot, thereby ending the litigation before the courts can issue decisions. potentially setting a precedent that could limit the ability of a future administration to enact broad student loan forgiveness using the same legal authority under the Higher Education Act.

The Trump administration may still attempt to pass new regulations that could impose certain limits to student loan forgiveness. But by withdrawing current regulations now, the Biden administration is essentially preventing the Trump administration from trying to turn these rules into vehicles for changes that could harm borrowers. And it could force the Trump-led Department of Education to start from scratch if Trump officials want to create new regulations related to student loans, which can be a long, tedious process that may ultimately be subject to challenges legal (as the Biden administration experienced). ).

Biden touts successful student loan forgiveness initiatives, including PSLF

Meanwhile, the Biden administration has ended its most successful student loan forgiveness initiatives, including enhancing Public Service Loan Forgiveness, or PSLF. Officials announced Friday that an additional 55,000 borrowers have been approved for PSLF relief, adding to the nearly 1 million borrowers who have already received PSLF relief. received student loan forgiveness under PSLF over the past four years. The administration also approved:

• $56.5 billion in student loan forgiveness for more than 1 million borrowers through income-driven repayment plans;
• $28.7 billion in loan forgiveness for at least 1.6 million people who were misled or harmed by their schools;
• $16.2 billion in medical discharges for approximately 572,000 borrowers through the Total and Permanent Disability Discharge Program.

What’s Next for Student Loan Forgiveness

The Biden administration recently brought back the ICR and PAYE planstwo income-driven repayment programs that can lead to possible student loan forgiveness after 20 or 25 years. The return of these plans comes as the SAVE plan, a new IDR option created by the administration last year, appears increasingly likely to be overturned amid an ongoing legal challenge, or repealed by the Trump administration.

With Republicans poised to control Congress and the White House next month, borrowers should expect to see changes that could impact student loan forgiveness programs. For example, Republican leaders in the House of Representatives are seeking to include a repeal of time-based IDR student loan forgiveness for new borrowers, as well as restrictions on new student loan forgiveness initiatives based on executive actions, in an upcoming budget reconciliation package. But the scope of a possible reconsideration of the loans remains unclear at this stage.

Meanwhile, borrower advocates are pushing the Biden administration to finalize implementation of student loan forgiveness for tens of thousands of already approved borrowers, but have not yet received relief. Some advocacy groups are also calling on the administration to unilaterally cancel student debt for older borrowers before Biden leaves office.