President Biden unveils student debt forgiveness scheme for Americans facing ‘hardship’ — just weeks after canceling another $5 billion in student debt. Does this plan stand a chance?

This could be one of President Biden’s biggest student debt cancelation moves yet — as alluded to by the Department of Education under secretary James Kvaal, who said the plan is to “give breathing room to as many student loan borrowers as possible.”

Here’s who stands to benefit.

“Hardship” proposal

In the wake of the Supreme Court’s decision to stamp down his original student debt relief plan last summer, President Biden has unveiled a string of targeted debt cancelation programs for specific groups of Americans.

This latest plan could have a very significant impact, depending on how the Department of Education chooses to define financial “hardship.”

In the proposed regulatory text — which is due for a debate in a rulemaking session on Feb. 22 and 23 — several factors are outlined that could be used to identify “hardship,” such as:

• A borrower’s relative loan balance and payments compared to their total income;
• If a borrower has high-cost burdens for essential expenses like health care or child care;
• Borrowers who have seen their loans grow larger because of snowballing interest; and
• If a borrower is considered highly likely to be in default in two years.

The text also specifies that the U.S. Secretary of Education may consider other factors to determine if borrowers are experiencing a type of hardship that would qualify for debt relief, but it does not elaborate on what those additional factors may be.

As a result, the White House could not give an estimate for how many Americans might be eligible for relief if this regulation is approved.