What Black student loan borrowers need to know about Biden’s new “Plan B” for debt relief

The collective plan goals to provide significant relief to Black borrowers who rely more heavily on student debt than white families and who take longer to repay, the Biden-Harris administration says.

President Joe Biden announced his long-awaited Plan B for student loan debt relief on Monday, almost a yr after the U.S. Supreme Court struck down his original program. A White House statement said the new plan would supply “significant relief” to Black and Latino borrowers.

“We know that there are large racial disparities in the student loan program, with students of color more likely to borrow larger amounts and have greater difficulty repaying (their loans),” US Under Secretary of Education James Kvaal told the Grio. Additionally, he said, this system would have a “positive impact on the racial wealth gap.

“Most black borrowers have more than 10 years of debt out of school than they originally borrowed due to higher interest rates than repayments,” Kvaal explained. “We need to bring relief to anyone struggling with their student loans.”

What is Biden’s plan B?

The announcement includes five methods to “fix” the federal student loan program, including allowing debt forgiveness for borrowers who owe more today than after they began repayment, who’ve been in debt for 20 years or longer and who’re experiencing financial hardship.

The Biden-Harris administration says the plan goals to provide significant relief to Black borrowers, who rely more heavily on student debt than white families and who take longer to repay their loans. Combined with existing federal government programs which have forgiven $140 billion in student loan debt for 4 million borrowers, the administration anticipates that greater than 30 million Americans will profit from some type of relief.

Borrowers who owe greater than the unique balance when interest payments begin can be eligible for federal student loan forgiveness, which Kvaal said amounts to about 25 million borrowers. This can be particularly vital for black borrowers who’re more likely to see their balances increase, According to to the Brookings Institute.

As for the debt relief program for vulnerable people, Kvaal said the Biden-Harris administration would consider health care costs or other “unusual family expenses.”

“We have a number of programs aimed at reducing payments or forgiving loans to people who are having trouble repaying their loans for a number of reasons,” he said. “But there are still many people who slip between these programs and struggle to repay their loans. These difficulties are intended to give us the flexibility to help additional people who really need it.”

Other plans announced Monday include the opportunity of debt forgiveness for borrowers who attended institutions that “failed to meet accountability requirements” or “failed to provide sufficient financial value to students.” These are educational institutions where the administration determines the offer of programs that don’t lead to paid work. Some institutions have been punished for being predatory lenders to students. Another principle of Plan B is to make efforts to be certain that existing programs can be found to those that qualify but haven’t yet applied.

When will student debt relief be granted?

While Plan B has been highly anticipated, particularly amongst black borrowers, it would not be implemented for several months. The next phase of the federal rulemaking process can be to allow the general public to provide comments on proposed programs before they change into policy.

The legal framework for the new program relies on the Higher Education Act, unlike the previous program under the HEROES Act, which was created in response to the economic hardships related to the COVID-19 pandemic and was rejected by the Supreme Court in June 2023.

Kvaal told the Grio day by day that the administration’s goal is to “finalize these plans” and “start providing student aid” by the autumn, likely just before Election Day on November 5.

Reactions to Biden’s student debt relief program

Although borrowers can have to wait somewhat longer, student loan advocates are praising Biden’s new plan.

U.S. Rep. Ayanna Pressley, D-Mass., said in an announcement that Plan B is “a powerful testament to borrowers across the country who have fought for economic justice and continued to advocate for student debt despite obstacles from the Supreme Court and Republicans.”

“While we will continue to press for further action that matches the scale of the crisis, this is a historic day and today’s announcement sets us on a path to ensure that more than 30 million borrowers and their families will receive life-changing student debt relief this year,” the statement continued.

Wisdom Cole, national director of the NAACP youth and college chapter, told the Grio that the president’s new plan is “a step in the right direction.”

Cole, one in every of the civil rights group’s lead negotiators in the course of the lawmaking process, said the administration “has hit a really great place.”

“Eliminating runaway interest and people having a balance larger than they originally owed is definitely a key benefit,” Cole said. “Eliminating this will actually enable people to become home owners (and) business owners.”

A student debt relief advocate said Biden canceled the “largest amount of student debt in U.S. history” because advocates and community leaders organized and “made it a priority issue.”

“This is a phenomenal opportunity to invest in our community,” he said.

What’s not in Biden’s student debt relief plan??

Still, Cole acknowledged that the civil rights community had urged the federal government to go further. For example, a proposal to create more debt relief pathways for incarcerated Americans shouldn’t be included in Plan B.

“There are some areas we still need to explore,” he said. “Some people in this situation will never be able to repay this debt. Many of the proposals that we discussed and submitted to the Department of Education gave people a chance to really engage with this economic system.”

Cole said the federal government must proceed to “do more” to address “problems in higher education,” especially how much higher education costs have increased over the many years. “If we really want to solve this problem, we need to start talking about free college. We need to start talking about college affordability,” he said. “It’s a good, ongoing conversation.”

Referring to the November election, Cole said: “Young people want to make sure that their politicians actually keep their words because we have influence.”

He added: “It’s actually an opportunity to see the promises made being kept.”

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