President Joe Biden offered details of a sweeping alternative student debt plan that would offer relief to tens of millions of American borrowers during a visit to the college town of Madison, Wisconsin, as he seeks to excite young voters frustrated after his original program was struck down by the Supreme Court.

Biden’s “Plan B” would see loans reduced or wiped out for millions of Americans — including those whose debt exceeds their original principal amount or who attended universities that offered little career benefits. Individuals who have made student loan payments for more than 20 years, are experiencing financial hardship, or who are eligible for federal loan forgiveness programs but have not previously enrolled would also be eligible.

Biden on Monday called mounting student debt “a drag on our local economies.”

“It’s a drag on the economies when you can’t afford to buy a home, start that small business, chase that career that you’ve been dreaming about for a long time,” Biden said.

Still, the proposal must withstand expected lawsuits that could stretch into next year, placing the issue of rising student debt squarely in the crosshairs of November’s presidential election. A lengthy regulatory process also threatens to prevent relief if a new administration scraps the plan.

The White House believes that if the plan is implemented, more than 30 million Americans would have federal loans forgiven when coupled with actions the administration has already taken.

An estimated 25 million borrowers would have their accrued interest fully or partially eliminated, more than 10 million borrowers would see at least $5,000 in debt cancelled, and 4 million borrowers would have their balances cleared. Around 2 million people who are eligible for government programs, such as public service loan forgiveness or closed-school discharge for institutions that shuttered during enrollment, could have their loans automatically forgiven. Some borrowers might qualify across multiple categories.

Americans eligible to receive assistance for unpaid interest could see up to $20,000 in forgiveness regardless of their income status. Low- and middle-income individuals also in the government’s income-driven repayment plans may qualify to receive cancellation for the total amount of interest growth to their balances since they started the program. Those borrowers must earn at most $120,000 in income, or $240,000 for married couples.

Biden defended his plan from criticism that the administration has focused on helping the college-educated at the expense of blue-collar workers.

“How about all those hardworking people who grew up and had no opportunity to go to college? I get it,” he said. “That’s why a big part of my economic agenda is invested in all Americans, whether you attend college or not.”

Young voters were crucial to Biden’s victory in 2020, when he vowed to cancel student loans as a candidate. In Wisconsin, Biden met with borrowers who have received relief through his previous initiatives, according to White House press secretary Karine Jean-Pierre.

Senior administration officials, who previewed the details, said relief for borrowers with accrued interest could occur as soon as this fall. However, the timeline is unclear for when all potential beneficiaries could see cancellation.

Legal Challenges
The Higher Education Action — the law the president is using to pursue relief — requires that actions take effect in July of the following year after a final rule is introduced, unless there are special circumstances. The administration has pursued other measures on a fast-tracked basis, including the so-called “SAVE” repayment program.

Kansas Attorney General Kris Kobach, who led 11 Republican-controlled states to sue the administration over past forgiveness moves, questioned the legality of the current proposal.

“If any of these schemes were a plausible reading of federal law, then the Biden administration would have done that in the first place and forgiven all of the selected loans in one step,” Kobach said in a statement.

So far under Biden, the White House has incrementally forgiven $146 billion in loans for 4 million people. The majority of that relief came in the months following the Supreme Court’s decision to throw out the president’s 2022 attempt to pursue up to $20,000 in debt cancellation for an estimated 40 million borrowers.

The court’s conservative majority ruled that such widespread relief could only be authorized by Congress. The president vowed to pursue a “Plan B” the same day it was struck down in court.

The final rule must first go through a comment period, which could last anywhere from 30 to 60 days. Some lawyers have challenged a 30-day comment period for previous actions, arguing such a timeframe is too short for major regulations.

Sheng Li, an attorney with New Civil Liberties Alliance also challenging the administration on other student-debt relief actions, says the interest-related measures have less legal footing than Biden’s initial proposal for widespread debt cancellation.

“These interest payments are not optional, and can’t be waived or canceled in any way,” Li said in an interview. “I just can’t imagine this new program really passing muster if given judicial scrutiny.”