As President-elect Donald Trump prepares to assume office in just a few weeks, the Biden administration remains committed to advancing its efforts on student loan forgiveness, aiming to benefit millions across the country. Recently, the U.S. Department of Education has forwarded its alternative strategy, known as “Plan B,” for student loan cancellation to the Office of Management and Budget for evaluation.
According to higher education authority Mark Kantrowitz, this review by the OMB represents the final hurdle before the policy can be officially documented in the Federal Register. Once this step is complete, the Education Department can proceed with alleviating or even wiping out certain student loans, as Kantrowitz elaborates.
In the realm of personal finance, there are other pressing matters too, such as the detailed November 2024 inflation outline, economists missing the mark on recession forecasts, and the potential consumer impact of Trump’s tariffs. President Joe Biden initiated efforts to reshape his student loan relief plan following the Supreme Court’s rejection of his initial proposal in June 2023. The revamped plan aims to assist specific categories of borrowers, including those with lengthy repayment histories or those who attended deceptive institutions.
Kantrowitz notes that the Biden administration is relentless in its pursuit of student debt relief, even as the president’s term winds down. Moreover, the Education Department might push, in Biden’s final month, to address loan cancellations for those under significant financial duress through another policy currently under OMB review, experts suggest.
Such cancellations could focus on borrowers enduring ongoing financial hardships that hinder their repayment ability, areas where existing department assistance falls short, according to a department spokesperson earlier this year.
Biden has already overseen the cancellation of more student debt than any of his predecessors, positively impacting nearly 5 million individuals. However, his broader relief efforts have frequently been thwarted by legal challenges spearheaded by Republican figures. As a result, his recent plans might also face similar legal obstacles, with consumer advocates predicting swift legal challenges against the newly proposed forgiveness measures once they are documented in the Federal Register.
Despite this, the U.S. Department of Education declined to provide any statements on the matter.
Advocacy groups and legislators continue to press Biden to exhaust all possibilities for assisting student loan borrowers before the Trump administration steps in. Trump, together with Vice President-elect JD Vance, have been outspoken critics of student loan forgiveness.
Polling data underscores the political divide on this issue: a survey from mid-May conducted by the University of Chicago Harris School of Public Policy and The Associated Press-NORC Center for Public Affairs Research indicates that only 15% of Republicans view student loan forgiveness as significant, compared to 58% of Democrats.
Commenting on the urgency, Braxton Brewington from the Debt Collective—a debtor’s union—warned, “The clock is ticking, and actions not taken by Biden in the next four weeks could result in years of hardship for tens of millions of working individuals.”
In early December, numerous lawmakers, including Senators Bernie Sanders and Ed Markey, penned a letter to Education Secretary Miguel Cardona, advocating for the forgiveness of debts incurred by borrowers who sought relief due to fraudulent practices by their educational institutions.
Their appeal calls for the swift processing of close to 400,000 pending borrower defense claims, which offer potential financial reprieve for individuals whose colleges unexpectedly shut down or engaged in deceitful conduct.
Reflecting on past practices, the lawmakers’ letter pointed out that under the previous Trump Administration, applications languished for extended periods, with numerous borrowers receiving denials instead of relief.
