2025 Student Loan Forgiveness Update: Who Qualifies for Biden’s $10,000 Debt Relief?

Diccon Hyatt is a seasoned financial and economic journalist who has extensively covered the pandemic-era economy through hundreds of articles over the last two years. He specializes in breaking down complex financial subjects into clear, accessible language, focusing on how economic changes impact individual finances and markets. His previous work includes contributions to U.S. 1, Community News Service, and the Middletown Transcript.

Key Highlights

• The Biden Administration is renewing efforts to forgive student loan debt for certain borrowers.
• Under new proposed federal rules, borrowers with loan balances that have increased over time or who began repayment about 20 years ago could have $10,000 of their debt forgiven.
• Those eligible but not currently enrolled in existing forgiveness programs, as well as borrowers from closed or federally ineligible schools, may also receive debt relief.

Borrowers with undergraduate loans older than 20 years, and individuals whose loan balances have grown due to accumulating interest, are primary candidates for student debt forgiveness under the Department of Education’s new proposals. These regulations, part of an ongoing negotiated rulemaking process, could be finalized in 2024.

The proposed guidelines offer $10,000 debt forgiveness for borrowers whose current balances exceed the amounts they owed when repayment began. Those who started repayment 25 years ago would have their debts forgiven entirely, and borrowers with only undergraduate loans would qualify for forgiveness after 20 years of payments.

“Student loans should serve as a pathway to opportunity, not an unending financial burden,” said Education Secretary Miguel Cardona. “This rulemaking aims to support borrowers who have been let down by our current student loan system and to implement regulations that ease the nation’s student debt challenges.”

This initiative follows the Supreme Court’s rejection of President Biden’s initial broad student loan forgiveness plan, which proposed canceling up to $20,000 per federal loan borrower. The administration hopes that targeting specific borrower groups will create more legally resilient policies.

Many borrowers on income-driven repayment plans experience growing loan balances despite regular payments, as their payments often do not cover accumulating interest due to income-based calculations. While these plans typically lead to forgiveness after 25 years of payments, the increasing debt burden has caused distress among borrowers.

The new rules also aim to forgive loans for eligible borrowers who have not applied for existing forgiveness programs like Income-Driven Repayment or Public Service Loan Forgiveness. Additionally, borrowers who attended closed schools or institutions excluded from federal aid programs will be eligible for loan cancellation.

The proposals include provisions to assist borrowers facing financial hardships not currently addressed by the loan system, though specific criteria and mechanisms are yet to be finalized.

A committee comprising student loan borrowers, educators, and system stakeholders is scheduled to review these proposed regulations on December 11 and 12, with final rules expected next year.

Throughout his presidency, Biden’s administration has pursued extensive student loan reforms, including introducing more flexible repayment programs and canceling $127 billion in debt for public servants, disabled borrowers, and others in qualifying circumstances.

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