The U.S. Department of Education (Department) today announced the next step in its ongoing efforts to provide student debt relief—a set of proposed rules that, if finalized, would authorize loan forgiveness for approximately 8 million borrowers experiencing hardship. If these rules are finalized as proposed, the Secretary of Education could waive up to the entire outstanding balance of a student loan when the Department determines a hardship is likely to impair the borrower’s ability to fully repay the loan or render the costs of continued collection of the loan unjustified.
“For far too long, our broken student loan system has made it too hard for borrowers experiencing heartbreaking and financially devastating hardships to access relief, and it’s not right,” said U.S. Secretary of Education Miguel Cardona. “The rules proposed by the Biden-Harris Administration today would provide hope to millions of struggling Americans whose challenges may make them eligible for student debt relief. President Biden, Vice President Harris, and I will not stop fighting to deliver student debt relief and create a fairer, more just, and more affordable student loan system for all borrowers.”
These proposed regulations would reach borrowers with persistent financial burdens that prevent them from repaying their student loans and who do not sufficiently benefit from other currently available forgiveness options. Such financial burdens could include unexpected medical bills, high child care costs, significant expenses related to caring for loved ones with chronic illnesses, or devastating economic circumstances from the impacts of a natural disaster.
Forbearances and other assistance programs can help student loan borrowers cope with unanticipated expenses, job loss, and income disruptions in the short run. However, larger-scale disruptions can have persistent negative impacts for individuals. For example, natural disasters can have lasting consequences that may cause unexpected and long-term disruptions in a borrower’s financial circumstances, even when the borrower may benefit from a forbearance or other support in the short term. Though many borrowers can and do recover, others can suffer from enduring challenges with delinquency and bankruptcy if they face limited access to options that help them recover from disasters. Some student loan borrowers are likely to continue to feel the effects of these disasters in the following years as they rebuild their homes and lives - and those who were previously just getting by are much more likely to experience long-term hardship.
Two Pathways to Relief Under the Proposed Rules
If these rules, which were prepared following the Department’s negotiated rulemaking session in February 2024, are finalized as proposed, millions of borrowers could access relief if they met the criteria specified through two different pathways for relief. The rulemaking committee reached consensus on the regulatory text in these proposed rules.
The first pathway would recognize the Secretary’s authority to grant individualized, automatic relief without an application. The Secretary could provide relief on a one-time basis to borrowers who the Department determines, based on a predictive assessment using existing borrower data, have at least an 80% chance of being in default within the next two years. The 17 non-exclusive factors that could be used for determining whether a borrower who is suffering hardship can qualify for relief include household income, assets, types and balances of student loans, debt balances and required payments relative to household income, Pell Grant recipient information, and more. The Secretary could then waive those loans to address hardships and prevent the severe consequences of default.
The second pathway would allow current and future cohorts of borrowers to receive relief based on a holistic assessment of the borrower’s hardship and would be primarily application-based. The Department would holistically assess whether a borrower is highly likely to be in default or experience similarly severe negative and persistent circumstances. If no other payment relief option exists to sufficiently address the borrower’s persistent hardship, the Secretary could waive the loan. The Secretary would stand up an application to begin to holistically assess borrower circumstances. Some factors that may be considered when holistically assessing borrower circumstances are also included in the proposed regulations.
By specifying pathways that authorize both automatic relief for millions of borrowers experiencing a qualifying hardship and a primarily application-based process for borrowers to obtain relief in the future, this proposal would support student loan borrowers for generations to come. Further, this action would authorize relief for many of the most at-risk borrowers. For example, approximately two-thirds of borrowers eligible for individualized, automatic relief under the first pathway would be Pell Grant recipients.
Next steps
The proposed regulations will be published in the Federal Register in the upcoming weeks. After the proposed regulations are published, the public may submit comments through the Regulations.gov website for 30 days. The Department expects to finalize the regulations in 2025.
View a copy of the proposed regulations here.
A Significant Track Record of Borrower Assistance
The Biden-Harris Administration has taken steps to reduce the burden of student debt and ensure that student loans are not a barrier to educational and economic opportunity for students and families. The Administration secured a $900 increase to the maximum Pell Grant award—the largest increase in a decade—and finalized new rules to help protect borrowers from career programs that leave graduates with unaffordable debts or insufficient earnings.
In addition to the achievements listed above, the Biden-Harris Administration has approved debt relief for nearly 5 million borrowers through various actions, including:
- $74 billion for over one million borrowers through the Public Service Loan Forgiveness (PSLF) program. By contrast, at the start of this Administration only 7,000 borrowers had been approved for PSLF.
- $56.5 billion for more than 1.4 million borrowers through Income-Driven Repayment. This includes administrative adjustments to income-driven repayment that brought borrowers closer to forgiveness and addressed longstanding problems due to past inaccuracies and the misuse of forbearance by loan servicers.
- $28.7 billion for more than 1.6 million borrowers who were cheated by their schools, saw their institutions precipitously close, or are covered by related court settlements.
- $16.2 billion for almost 572,000 borrowers with a total and permanent disability.