President Joe Biden's plan for student loan cancellation is advancing as a proposed regulation, bringing him closer to fulfilling a campaign promise and garnering support from young voters ahead of the November election. The Education Department has submitted the necessary paperwork for a new regulation that aims to deliver the loan cancellation announced by President Biden last week. However, the proposal must still undergo a 30-day public comment period and further review before it can be finalized.

This new plan is more targeted than the one struck down by the U.S. Supreme Court last year. It utilizes a different legal basis and seeks to cancel or reduce loans for more than 25 million Americans. Nevertheless, conservative opponents argue that it unfairly burdens taxpayers who did not attend college, and have threatened to challenge the proposal in court.

During a recent trip to Wisconsin, President Biden highlighted the importance of the plan, describing it as "life-changing" relief for borrowers. He outlined five categories of people who would be eligible for assistance. The Education Department's paperwork covers four of these categories, while a separate proposal addressing relief for individuals facing various hardships will be filed at a later date.

The broadest category of loan forgiveness focuses on borrowers who owe more than their initial loan amounts due to accumulating interest. Under this provision, up to $20,000 in interest would be eliminated for those in this situation. Additionally, borrowers with annual incomes below $120,000 who are enrolled in income-driven repayment plans would have all their interest erased with no maximum limit. This forgiveness would be applied automatically.

Another category of loan cancellation aims to assist individuals who have been repaying their undergraduate student loans for at least 20 years, as well as those who have been repaying graduate loans for at least 25 years.

Furthermore, loans would be automatically canceled for individuals who attended colleges or programs considered to have low financial value. Eligibility for cancellation would depend on whether the program left graduates with earnings no better than those holding a high school diploma or if it burdened graduates with an excessive amount of debt compared to their incomes.

In an effort to reach borrowers who are unaware of other available programs or have been discouraged by complex application processes, individuals eligible for other federal forgiveness programs but who have not yet applied would also have their loans erased. Federal education officials would utilize existing data to identify these individuals and offer them relief.

The proposal was developed through a series of hearings as part of a federal rules process that sought input from external experts. Students, college officials, state officials, borrower advocates, and loan servicers contributed to the drafting of the plan.

Advocates during the rulemaking process called for a fifth category of forgiveness for individuals facing various hardships that prevent them from repaying their loans. The Education Department is still working on the specifics of this rule and plans to file a separate proposal in the coming months.

According to the department, the hardship proposal would provide cancellation to borrowers who are at high risk of defaulting on their loans, as well as those facing other hardships such as significant medical expenses or caregiving responsibilities. This proposal is in line with recommendations made by outside experts during the rulemaking process.

Typically, it takes several months for a proposed rule to be finalized, followed by additional time before it can take effect. However, the Biden administration intends to implement certain aspects of the new proposal as early as this fall, utilizing the education secretary's authority to implement rules early under certain circumstances.

Republicans firmly oppose any broad student loan cancellation, arguing that it constitutes an unfair bailout for individuals who attended college. Two coalitions of Republican states have even sued the Biden administration in an attempt to block a separate repayment plan that offers an accelerated path to loan forgiveness.

The White House maintains that the new plan is legally sound, citing the Higher Education Act, which grants the education secretary the power to waive student loans in specific cases.

This article was generated using information from The Associated Press, with their education coverage receiving financial support from multiple private foundations. The AP is solely responsible for all content.