President Biden unveiled his new student loan debt forgiveness plan on Monday, targeting nearly 30 million borrowers. The proposal, which aims to reduce payments for 25 million borrowers and erase all debt for more than four million Americans, still needs to be finalized and may face legal challenges similar to those that derailed his previous attempt at large-scale debt forgiveness. The plan includes canceling up to $20,000 in interest for borrowers whose loan balances have grown due to interest, waiving the entire interest balance for low- and middle-income borrowers enrolled in income-driven repayment plans, and automatically canceling debts for borrowers eligible for existing forgiveness programs.

The proposal also includes canceling debts for borrowers who have been repaying loans for more than 20 years for undergraduate debt or 25 years for graduate debt, as well as for those who attended institutions that lost federal funding due to fraud or low-value programs. Additionally, borrowers facing hardships such as medical or childcare costs could be eligible for relief. The administration estimates that 10 million borrowers could see relief of $5,000 or more under the plan.

President Biden's new plan is more targeted than his previous proposal, focusing on borrowers in greatest need of help. It uses a different legal justification, the Higher Education Act, and targets five categories of borrowers, offering relief to an estimated 30 million borrowers. The plan would provide automatic relief for most borrowers, with some exceptions for those facing hardships who may need to apply individually. The administration aims to start canceling debts as soon as this fall if the plan moves forward after the required comment period. While the administration is confident in the legal basis for the plan, it may still face legal challenges.