US Education Dept cancels loan forgiveness plans impacting 30 million students weeks before Trump takes office: What borrowers should know
Plans Scrapped: Biden administration cancels two major initiatives: The year 2024 has been tumultuous for US student loan borrowers in the, marked by notable shifts and lingering uncertainties. From the end of the long-standing payment pause to rising interest rates, many borrowers saw their financial challenges compound.
The introduction of the Saving on a Valuable Education (SAVE) plan held promise, but its delayed rollout added to the frustration. While strides were made—such as forgiveness for public service workers—broad-scale relief initiatives hit roadblocks, leaving millions of borrowers in limbo.
2024—A year of high hopes and heavy burdens for student borrowers
In a surprising turn, the Biden administration abandoned two broad student loan forgiveness plans last Friday. These initiatives, once a lifeline for an estimated 30 million borrowers, sought to tackle ballooning loan balances from compounding interest and offer relief to those in severe financial distress. If implemented, these plans could have dramatically eased the debt burden for countless American students.
The Department of Education formally withdrew the proposed regulations, also called notice of proposed rulemaking, (NPRM) through notices in the Federal Register, citing agency flexibility as a reason for their decision. This move comes mere weeks before Donald Trump’s inauguration, potentially reflecting the administration’s anticipation of legal and political obstacles that could stall or nullify the plans.
The Department has also concluded that withdrawing the NPRM will assure agency flexibility in re-examining the issues and exploring options and alternatives with stakeholders in the future.
In a DoE notice in the Federal Register (dt. 26.12.2024)
While this decision dashes hopes for widespread relief, officials may have strategically scrapped the initiatives to safeguard future efforts. The cancellation potentially preempts adverse actions by the incoming administration, allowing room to revisit and refine these proposals under more favorable conditions.
Read the Federal Register notice here.
What does this mean for borrowers?
Though the cancellation is a blow to millions, relief is not entirely off the table. Existing programs like Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness (TLF) continue to offer lifelines.
PSLF remains a robust option for not-for-profit and government employees, clearing federal student loans after 10 years of qualified payments. TLF, on the other hand, provides up to $17,500 in forgiveness for teachers working in low-income schools for five consecutive years.
The Biden administration also highlighted recent successes, such as forgiving $4.28 billion in debt for nearly 55,000 public service workers, part of the nearly $56.5 billion erased for over a million borrowers under income-driven repayment plans. Other initiatives have cleared billions for borrowers misled by schools or those permanently disabled.
A dim outlook, but the fight for relief continues
The end of 2024 may feel bleak for many borrowers, but it’s not the end of the road for relief efforts. The fight for broader student loan forgiveness is far from over.
Borrowers should monitor ongoing developments closely. While mass forgiveness plans are off the table for now, other targeted relief efforts remain active. Advocacy groups are also urging the administration to expedite relief for thousands already approved under existing programs.
For those navigating their repayment journey, resources like income-driven repayment plans or state-specific relief programs might provide additional support. As legal and political landscapes evolve, staying informed will be key to leveraging available opportunities.
