Gen Z May Miss Out on Biden Student Loan Forgiveness

The latest proposal by the Biden administration could lead more than 30 million Americans with student debt to see their loans forgiven.

The plan announced on Monday is focused on borrowers under the Saving on Valuable Education (SAVE) plan, Public Service Loan Forgiveness, or other forgiveness opportunities who have been in repayment for a decade on a debt of up to $12,000. Other borrowers who may get their student debt canceled are those who have been in debt for at least 20 years but are yet to clear their loans. The bulk of the forgiveness will be achieved by those whose loans are now significantly larger than their original debt due to interest.

Monday’s announcement suggests that a significant chunk of their debt cancellation will go to Americans with long-standing student debt—about a decade or more. It seems like Gen Z students—those born between 1996 to 2010. The oldest of this group are now in their late 20s.

Part of the White House plan includes those undergraduate student borrowers who first began paying back their date on July 1, 2005, or before that. Graduate students who started repaying their loans beginning on or before July 1, 2000.

The White House suggests that they are looking to release the rules over their latest proposals over the coming months.

“If these plans are finalized as proposed, this fall the Administration would begin canceling up to $20,000 in interest for millions of borrowers and full loan forgiveness for millions more,” they said in their statement.

Newsweek contacted the White House for comment via email on Monday.

Canceling student debt has been a key promise of President Joe Biden since he first ran for office nearly four years ago. But his initial plan to forgive up to $20,000 for borrowers was stifled last summer after the Supreme Court struck down the policy. The administration has since then deployed other ways to cancel debt by revising certain administrative rules and have introduced new approaches that have led to 4 million Americans seeing their debt forgiven totaling nearly $150 billion.

Using what it described as “negotiated rule-making under the Higher Education Act,” the White House is able to pursue more student loan forgiveness.

“In total, these plans would fully eliminate accrued interest for 23 million borrowers, would cancel the full amount of student debt for over 4 million borrowers, and provide more than 10 million borrowers with at least $5,000 in debt relief or more,” the White House said in a statement.

Some analysts suggest that the Biden administration may still have to overcome some challenges.

“Though this new plan uses a different legal underpinning than the student loan forgiveness struck down by the Supreme Court, there may still be legal challenges,” Kate Wood, a lending expert at NerdWallet, said in a note shared with Newsweek. “If enacted, these programs would not begin rolling out until the fall, and their effects wouldn’t reach most eligible borrowers until next year.”