In October, Biden might commence absolving student debt.

• Biden may announce a plan to forgive student debt in the coming month, potentially affecting millions of Americans.
• The relief package is almost certain to face legal challenges.

Biden may announce a plan to forgive student debt in the coming month, potentially affecting millions of Americans.

The Biden administration's effort to provide aid for student loans could occur about 14 months after the Supreme Court blocked its initial plan. Shortly after the court ruled in June 2023, Biden pledged to find a new approach to alleviate people's student debt.

Although Republican-led legal challenges have hindered the president's efforts to implement comprehensive student loan relief, his administration has still managed to cancel more debt than any previous administration.

Nearly $169 billion in loan forgiveness has been approved by the Biden administration for approximately 4.8 million people through improvements to long-troubled loan relief initiatives.

Its new plan is expected to reach at least 25 million more people.

Relief could come as soon as next month

The U.S. Department of Education announced that it will release its final rule on student loan relief in October, as part of the Biden administration's Spring 2024 Unified Agenda of Regulatory and Deregulatory Actions.

According to higher education expert Mark Kantrowitz, the administration wouldn't be able to implement its program until July 2025 due to the regulatory changes' timeline. Nevertheless, the department could act earlier by publishing a notice in the Federal Register, as Kantrowitz pointed out.

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According to Kantrowitz, the rule's publication is expected to take place in early October, allowing the conflict between Democrats and Republicans over student debt forgiveness to persist during the election.

A spokesperson for the Education Department pointed CNBC to Biden's unified agenda.

The Biden administration started sending emails to millions of borrowers in August about its new plans to eliminate student debt. Additionally, borrowers were given the option to opt-out of the relief by Aug. 30 with their loan servicer.

According to Kantrowitz, the Biden team may have used emails to demonstrate the importance of loan forgiveness in the election, which could impact millions of Americans.

He stated that it demonstrates to borrowers the consequences of a Republican victory.

As president, Trump advocated for the abolition of the U.S. Department of Education's current loan relief programs, including the widely-used Public Service Loan Forgiveness program. Additionally, he proposed to drastically reduce the department's budget, and his administration put a stop to a regulation that would have granted loan forgiveness to individuals who were deceived by their schools.

Conservatives often argue that it is unfair to forgive the debt of those who have benefited from higher education and burden taxpayers with the cost of doing so. Approximately one-third of Americans aged 25 and older hold a bachelor's degree, according to an estimate by Kantrowitz.

4 groups of borrowers expected to qualify

The Education Department revised its forgiveness plan to be more targeted in the hope that it will survive legal challenges.

The department outlines four categories of eligibility in their email to borrowers.

1. Borrowers who owe more than they did at the start of repayment.
2. Individuals who repaid their undergraduate loans before July 1, 2005, or graduate loans before July 1, 2000, are eligible for loan forgiveness.
3. Those who are eligible for student loan forgiveness under the government's existing programs but have not yet applied.
4. Students from "low-financial value" programs.

Republicans may try again to stop relief plan

Biden's new student loan forgiveness plan resembles his initial proposal.

Missouri Attorney General Andrew Bailey, a Republican, wrote on X that Biden's revised relief program is an attempt to "unabashedly eclipse the Constitution."

"See you in court," Bailey wrote.

Six Republican-led states, including Missouri, filed a lawsuit against Biden's first debt relief plan.

The six conservative Supreme Court justices concurred with the red states that the president exceeded his authority and that canceling debt would harm the profits of lenders.

Legal challenges are certain to arise once the Biden administration releases its new student loan forgiveness plan in October, according to Kantrowitz.

Soon after the final rule is published, lawsuits to block it will be filed.

The Supreme Court ruling could pose a challenge to Biden's revised plan.

In June, the high court overturned the 40-year-old Chevron Doctrine, which mandated judges to defer to federal agencies' interpretation of contested laws. The 6-3 decision, which divided the conservative-majority court based on ideology, is predicted to weaken the federal government's regulatory authority.