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New Proposed Rule Would Target Student Debt Cancellation to Those Most in Need of Relief

FOR IMMEDIATE RELEASE
October 25, 2024
Contact: Emma Bittner
(972) 510-3395 | Emma.Bittner@younginvincibles.org

New Proposed Rule Would Target Student Debt Cancellation to Those Most in Need of Relief

(Washington, DC) – Today, the Biden-Harris Administration released a new wave of proposed rules regarding student debt cancellation, this set with an emphasis on financial hardship. These draft rules come as a direct result of demands from Young Invincibles, trusted partners, legislators, and borrowers nearly nine months after the conclusion of Negotiated Rulemaking to establish provisions for those experiencing hardship as a result of student debt. The rules will be formally published in the coming weeks, followed by a 30-day comment period for borrowers and advocates to weigh in. 

The Notice of Proposed Rulemaking (NPRM) outlines two pathways to debt relief. First, the U.S. Secretary of Education would grant automatic, individualized relief without requiring an application for borrowers who have an 80 percent chance of defaulting within the next two years. This would be a one-time relief based on borrower data, considering 17 non-exclusive factors such as household income, assets, types and balances of student loans, debt-to-income ratio, and Pell Grant recipient status. These factors would help determine if a borrower is experiencing financial hardship and qualifies for one-time loan forgiveness.

Second, current and future cohorts of borrowers could receive relief through an application-based process that takes a holistic view of their hardship. This would allow the Department to evaluate a borrower’s overall financial situation and assess whether they are at high risk of default or facing similarly persistent financial difficulties. If no other payment relief options are available, the Secretary could waive the loan.

If finalized, this rule will authorize loan forgiveness for approximately eight million borrowers experiencing hardship. 

Young Invincibles remains committed to ensuring that young adult borrowers are up to date and well-informed about a path to cancellation, as well as continuing to advocate for continued widespread student debt relief.

In response, Kristin McGuire, Executive Director of Young Invincibles said: 

“Finally, eight million borrowers are getting the relief they desperately deserve. For too long, current and future borrowers have been left behind to juggle the burden of debt. This proposal brings us yet another step closer to the promised widespread debt relief, with a critical emphasis on financial hardship, ensuring that young adult borrowers are not a forgotten group. We are thrilled to see the new rules recognize that student debt isn’t just about past borrowers – it’s about protecting future generations too.

These draft rules are a direct result of the Biden-Harris Administration listening to the voices from those of us who are the most impacted- actual borrowers. While this is yet another lawful avenue to cancel student debt, pushback is anticipated, so it is crucial that we move forward quickly to deliver this much-needed relief. Young Invincibles will continue to work diligently to ensure that widespread student debt relief is delivered and President Biden follows through on his promise.”

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Young Invincibles (YI) is a national advocacy and policy nonprofit organization focused on amplifying the voice of young people in the political process at the local, state, and federal levels. YI focuses on issues impacting young adults ages 18 to 34 in higher education, health care, economic security, and civic engagement. Our offices include Washington, D.C., California, Colorado, Illinois, New York, and Texas. For more information, please contact Emma Bittner at (972) 510-3395 or emma.bittner@younginvincibles.org