The Biden administration is pursuing a Plan B to pass student debt cancellation, after the Supreme Court struck down its plan to erase up to $20,000 in debt per borrower earning less than $125,000.
The new plan would be more limited in scope and apply to fewer borrowers. For example, if the interest on a loan grew to be larger than the borrower’s principal balance, the government would erase any amount above what was originally borrowed.
Policymakers wrapped up negotiations on the new plan in December, and there could be a draft version as early as April — but legal challenges and a presidential election this year could derail the plan, says Betsy Mayotte, president and founder of The Institute of Student Loan Advisors.
“The way negotiations left, there are still a lot of unanswered questions about what this might look like,” Mayotte says.