Could you or someone you know benefit from federal student loan debt relief? There’s potential good news on that front, but don’t jump to any conclusions. Proposed measures from President Joe Biden’s administration would offer loan forgiveness for some borrowers, but only if they meet certain specific criteria.
As you may recall, the Supreme Court rejected the Biden administration’s plan for federal student loan relief in June. However, the White House quickly asserted that President Biden was “not done fighting yet.”
Now, it appears that Biden is trying to make good on that promise. So, let’s delve into the details and see who might qualify if the White House’s proposed measures become the law of the land.
Student Loan Debt Relief: Would You Qualify?
According to the White House’s official statement, the Biden administration has already approved $127 billion worth of debt relief for nearly 3.6 million federal student loan borrowers. Just recently, the administration drafted new proposals for student loan debt relief.
If the proposals were to pass in their current form, they would apply to borrowers with:
- federal student loan balances exceeding what they had originally borrowed.
- loans that first entered into repayment status 25 or years ago or longer.
- loans “to attend career-training programs that created unreasonable debt loads or provided insufficient earnings for graduates.”
- debt from “institutions with unacceptably high student loan default rates.”
- loans from institutions that the Secretary of Education “determines are eligible for forgiveness under repayment plans,” such as “relief programs like Public Service Loan Forgiveness.”
The announcement also hinted at a fifth group: borrowers “who are experiencing financial hardship that the current student loan system does not currently adequately address.” This, obviously, could address a broad range of federal student loan borrowers.
What This Means for Investors
It’s too early to draw any hard-and-fast conclusions. Investors should expect immediate and fierce pushback from the courts as well as from some members of Congress.
Still, it might be reasonable to cut back on investments that are directly related to student loan debt relief. Two examples would be SoFi Technologies (NASDAQ:SOFI) stock and LendingTree (NASDAQ:TREE) stock. Both of those stocks can be highly sensitive to news updates on lending trends.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.