Under Biden's new proposal, 8 million borrowers may be eligible for student debt forgiveness.

President Joe Biden is moving forward with another student debt relief plan.

The Department of Education announced on Friday that an estimated 8 million federal student loan borrowers may be eligible for loan forgiveness if the proposed regulation is finalized. Some borrowers may even receive automatic loan forgiveness.

The proposed regulation was developed through a months-long process of negotiated rulemaking, during which the Biden administration collaborated with stakeholders, experts, advocates, and others to create a plan to provide debt relief to borrowers experiencing financial difficulties.

The proposal outlines two pathways to debt forgiveness:

• The department will automatically forgive borrowers who have a high chance of defaulting on their loans within the next two years.
• Primarily application-based relief for current and future borrowers with demonstrated, persistent hardship

According to Secretary of Education Miguel Cardona, the rules proposed by the Biden-Harris Administration today would offer hope to millions of Americans facing financial difficulties and who may be eligible for student debt relief.

If the proposal is finalized as currently written, borrowers may anticipate certain outcomes.

Relief for the 'most at-risk' borrowers

The rule aims to help borrowers with unmanageable student debt balances avoid catastrophic consequences by clearing their debt.

The Biden administration stated that this action would provide relief for many at-risk borrowers.

The Biden administration claims that by assisting borrowers before they default on their loans, it will save taxpayer money and increase the likelihood that the borrower will improve their financial situation and contribute to the economy.

The department evaluates borrowers on a holistic basis through the second application-based pathway to relief, but this option is available for those who do not meet the qualifications for automatic loan discharge.

The department stated that if no other payment relief options are available to adequately address the borrower's ongoing difficulties, the Secretary may waive the loan.

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