The dream of broad student loan forgiveness has officially ended. Dubbed “Plan B,” this initiative aimed to provide relief to millions of borrowers struggling under the immense weight of student loan debt. However, just weeks before the Biden administration ends, the program’s draft regulations have been withdrawn, signaling the end of the fight for a mass student loan forgiveness opportunity for millions.
The withdrawal raises several questions about what’s next for student loan borrowers and why the administration chose to step away.
What Was Plan B Forgiveness?
After the Supreme Court overturned President Biden’s first attempt at student loan forgiveness, the administration shifted its efforts to Plan B. This plan was designed to create relief through the negotiated rulemaking process, which would have established regulations to aid borrowers without needing congressional approval.
The program targeted borrowers in specific circumstances, including:
- Runaway interest: Borrowers who were burdened by skyrocketing interest rates that made repayment almost impossible.
- Long-term repayment: Those who had been repaying their loans for over 20-25 years without meaningful progress.
- Low-value schools: Individuals who attended institutions that provided little return on educational investment.
- Missed forgiveness opportunities: Borrowers who were eligible for forgiveness but failed to apply.
- Financial hardship: Those struggling to meet basic financial needs due to loan repayment pressures.
Why Did Biden Walk Away?
The decision to abandon Plan B was not made lightly, nor without strategy. Several factors influenced this outcome, including the end of Biden’s presidential term.
At the core of this decision were the ongoing legal battles surrounding student loan forgiveness. These challenges were set to extend into the Trump administration. The Trump administration was not expected to champion broad forgiveness efforts. Even if a decision were made on the plan during the Biden’s term, it was unlikely that the decision would be favorable.
An additional concern was the risk that the incoming administration could modify the same base regulations to make forgiveness more restrictive in the future. By withdrawing the existing Plan B framework, the Biden administration ensured that the Trump administration would need to start over to create new regulations. This move was designed to delay any restrictive measures and protect borrowers from potentially harsher policies.
The Future of Forgiveness
Even under the Biden administration, experts have consistently recommended against relying on broad forgiveness programs. Nevertheless, borrowers still have access to other forgiveness options that remain intact under current laws.
PSLF, Public Service Loan Forgiveness, offers loan forgiveness for borrowers who dedicate 10 years to public service work while making 120 qualifying payments. Borrowers interested in PSLF should continue to work for eligible employers, and it is recommended that they submit employment certification forms at least annually to ensure they remain on track.
While it’s a long-term commitment, PSLF remains one of the most stable options for student loan forgiveness, as it is written into law.
Income-Driven Repayment Options Return
One silver lining is the extension of certain income-driven repayment (IDR) plans, which have been made available for borrowers until July 2027. These plans include PAYE (Pay as You Earn), and ICR (Income-Contingent Repayment). IBR (Income-Based Repayment) is also another IDR option that was not phased out earlier this year and will remain an option for eligible borrowers.
What About the SAVE Plan?
The SAVE Plan, another initiative from the Biden administration, remains in limbo. The plan is still under review in the courts, leaving its future uncertain. Borrowers currently enrolled in SAVE are in administrative forbearance, meaning they’re not required to make repayments and their interest rate is set to 0, for now. Borrowers enrolled in SAVE should stay informed about updates to this program and prepare for potential shifts under the new administration.
Student Loan Repayment Strategy
The end of broad student loan forgiveness under Plan B is undoubtedly a setback for millions of borrowers hoping for financial relief. However, this does not mean all avenues for assistance are closed. Programs like PSLF and IDR plans remain available, offering pathways to manage debt and achieve financial stability.
As we transition into a new administration, borrowers should stay proactive, informed, and engaged in the conversation surrounding student loans. Though the promise of broad forgiveness may have faded, there are still opportunities to create a manageable and sustainable financial future.