Students Keep A Close Watch On Email Inboxes As Biden's Debt Relief Plans Make Headway

The U.S. Education Department is inching closer to the implementation of a comprehensive student debt cancellation plan, potentially bringing relief to millions of student loan borrowers.

What Happened: The Education Department has announced that it is making headway in its plan to cancel student debt using the Higher Education Act of 1965, as per a Business Insider report on Wednesday. This move comes after the Supreme Court dismissed President Joe Biden’s initial relief attempt last summer.

Currently undergoing a negotiated rulemaking process, the plan is set to benefit over 30 million borrowers. This process involves the department negotiating with stakeholders and holding a public comment period before finalizing the rule.

All borrowers with at least one federal outstanding student loan will receive an email from the Education Department with updates on the relief, including a notification of an Aug. 30 deadline to contact their servicer if they wish to opt-out.

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Some borrowers may choose to opt out of the current plan due to concerns about state tax liabilities if they receive loan forgiveness. The department has stated that those who opt out cannot opt back in later. The rules are not yet finalized, and borrowers who receive an email are not automatically guaranteed relief. The department will provide additional details to eligible borrowers upon finalization.

Why It Matters: The previous round of student loan debt cancellation by President Biden, which amounted to more than $7.4 billion, benefited roughly 277,000 borrowers. However, it faced opposition from GOP-led states and was eventually blocked by a federal appeals court.

The Education Department released its draft rules for debt relief in April, with plans to finalize the rules by October. However, the plan could face lawsuits similar to those that struck down Biden’s first plan, potentially causing delays to the relief depending on court rulings.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari