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What Biden’s new student loan forgiveness plan means for Michigan borrowers

Joe Biden
President Joe Biden announced Monday a series of proposals that would eliminate student loan debt for millions of Americans. The announcement comes about seven months before the presidential election. (Jonah Elkowitz /
  • The Biden Administration is aiming to forgive more student loans
  • The plans could help borrowers who have been paying back their loans for a long time or are experiencing economic hardship
  • About 87,680 Michigan student loan borrowers have already had a total of $4.2 billion in student loans forgiven through existing programs

President Joe Biden announced Monday a new set of proposals aiming to waive federal student loan debt for millions of Americans, including many Michigan borrowers.

The plans, which are not yet finalized, would forgive student loans under specific circumstances, including for borrowers who have been paying for 20 years or more and payers who have seen their balances grow anyway due to interest.


All told, the proposal would “cancel some or all student debt for 30 million Americans when combined with everything we’ve done so far,” Biden said in a video announcement. 


Roughly 87,680 Michigan student loan borrowers are already in line for a combined $4.2 billion in forgiveness under existing programs, the U.S. Department of Education announced Monday

That’s a fraction of the estimated total student loan borrowers in the state. 

The Education Data Initiative, a group that collects U.S. education data, estimated in 2022 there were 1.4 million student loan borrowers in the state with a collective debt of roughly $51 billion. Michigan borrowers have an average student loan debt of $36,116, according to the group. 

Biden’s latest proposal comes about seven months before the November election and gives the Democratic president another chance to follow through on his 2020 campaign pledge to forgive a wide array of student loans. 

In August 2022, Biden announced a plan to forgive up to $20,000 per borrower. But the U.S. Supreme Court ruled struck down that plan last summer, and Biden said he would pursue other means of loan forgiveness.

Former President Donald Trump, this year’s presumed Republican nominee, has generally opposed the push and previously argued Biden’s original plan "would have been very unfair to the millions and millions of people who paid their debt through hard work and diligence."

The new Biden proposals are subject to an ongoing rulemaking process the White House began last year after the Supreme Court ruling. That will continue with an opportunity for public comment in coming months. 

If finalized as proposed, the Biden administration "plans to start implementing some of these plans, such as interest cancellation, as early as this fall," said White House Press Secretary Karine Jean-Pierre.

The new plan proposes five different ways federal loan borrowers could qualify for savings or forgiveness. Here is more information about each. 

Waiving interest for borrowers 

Under one proposal, the federal government would cancel up to $20,000 in debt for borrowers who have made payments but still seen their balance grow due to unpaid interest.  

There are more than 25 million borrowers who owe more than they originally took out in loans, according to the U.S. Department of Education.

The proposed plan would allow borrowers enrolled in a repayment plan based on their income to be eligible for forgiveness of the full amount their balance has grown since they reentered the repayment process. 

If the plan is finalized, borrowers would not need to file a separate application.

Of the 25 million borrowers who might benefit, about 23 million would see “the entirety of their balance growth eliminated,” the department said. 

Automatic debt relief for some qualifying borrowers

The federal government already allows for student loan borrowers to qualify to have their remaining debts forgiven under certain circumstances, and Biden’s new plan would make that forgiveness automatic in some circumstances.

For example, borrowers who took out $12,000 or less in loans and have been paying their loans back for 10 years can have their loans forgiven under a repayment program called Saving on a Valuable Education Plan, also known as the SAVE plan.

Under the proposed plan, borrowers who qualify for forgiveness while enrolled in the SAVE Plan or other loan plans, would receive forgiveness without having to apply. 

“Too many borrowers eligible for relief—including immediate cancellation—have historically not been able to overcome paperwork requirements, bad advice, or other obstacles,” the department said in a news release. 

Eliminating debt for 20-year payers 

There are more than 2 million borrowers who have been paying off their loans for 20 years or longer, according to the department. 

The proposed plan would eliminate debt for those who have only undergraduate loans they have been paying back since on or before July 1, 2005. It would forgive debt for those with graduate school loans who have been paying back their loans since on or before July 1, 2000. 

Relief for borrowers from “low-financial-value” programs

The proposal would forgive loans for people who enrolled in schools or programs that lost eligibility to participate in the federal student aid program or “were denied recertification because they cheated or took advantage of students.” 

Forgiveness would be based on where the loan borrower attended school, not the amount of debt the person has.


Borrowers who attended schools or programs that “closed and failed to provide sufficient value” would also be eligible.

Additional help for ‘hardship’

The Biden administration will also pursue a way to cancel loans for those who are “experiencing hardship in their daily lives that prevent them from fully paying back their loans now or in the future,” the education department said. 

Although the department gave few specifics, it said the plan could include automatic forgiveness for those predicted to default on their loans, or a specific application for borrowers to outline their inability to pay back their loans.

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