ST. LOUIS — While the Biden administration awaits a final ruling from the U.S. Supreme Court on its plan to forgive student loan debt, education officials have rolled out a new student loan debt repayment plan that it could implement in addition to the proposal currently tied up in court.
All federal student loan payments are on pause until June. When the federal government inevitably starts collecting student loan debt again, it intends to start collecting less from borrowers who make less in income.
President Biden's Education Department proposed a "safety net" plan to ease the burden on borrowers at the lower end of the earning scale.
For a single person making less than $30,600 per year, the government will soon reduce the monthly payment to $0, indefinitely suspending collection on that debt. The same pause would also apply to a family of four making $62,400.
In an interview on 5 On Your Side's weekly political show 'The Record,' Biden's Education Secretary Miguel Cardona said they plan to lower monthly payments, capping payments for undergraduate loans at 5% of borrower's pay.
"What we're trying to do here is provide a repayment plan that works to prevent what we've been seeing over the last several years, over a million people defaulting a year in their loan repayment," Cardona said.
"Both of these strategies are part of a bigger strategy that we're doing to make higher education more affordable and more accessible," he said. "How many people are not going to college because of the fear of bad loans?"
Cardona said the administration crafted the new progressive repayment plan and the student loan debt forgiveness plan in a way that he hopes will show sensitivity to workers who live paycheck-to-paycheck and struggle to get by.
"I make it analogous to small businesses that needed a support to get back on their feet," Cardona said. "We're talking about blue-collar folks who are helping pay for their child's education."
"We're confident that we're helping everyday Americans, much like we help small businesses, or we help industry when they were in trouble, too," he said.
The indefinite pause in collecting debt would not cancel or forgive that debt outright, which could inject new life into the debate over student loans along the presidential campaign trail in 2024.