Biden’s New Student Debt Relief Proposal Aims to Avoid Supreme Court Fate

President Biden’s latest student loan forgiveness program brings flashbacks to his 2022 universal relief plan, which was struck down by the Supreme Court, but experts are not convinced this will be a repeat of past failure.

The Biden administration’s ability to learn from its past mistakes and the scope of borrowers the new plan affects could be crucial to overcoming the legal challenges posed to it. However, fears that student debt relief will be presented to voters only to be withdrawn before Election Day persist given the timing of the plan.

“I think that’s the main difference: this kind of focus on the plan that could have forgiven entire debts in 2022 and this latest wave, where some individuals may have their entire debt waived in some of the more targeted programs, but the forgiveness program widespread would not be wiping out entire balances,” said Katharine Meyer, a fellow at the Brown Center for Education Policy at the Brookings Institute.

The plan proposed by Biden last Monday would target certain groups of borrowers for relief: those with income-driven repayment (IDR) plans, people who have been repaying loans for more than 20 years, borrowers who have turned to low-income institutions. financial value, people experiencing difficulties and those with unpaid interest growth.

The biggest of these are those with unpaid interest growth: about 25 million Americans would receive partial or full forgiveness of that part of their loans.

The only group that can receive full forgiveness are those who have IDR plans and who qualify for relief but who have faced red tape to receive it.

“The Biden-Harris administration plans to release proposed rules on these plans in the coming months. If these plans are finalized as proposed, this fall the Administration will begin canceling up to $20,000 in interest for millions of borrowers and full loan forgiveness for millions more,” the White House said in its announcement.

This deadline would echo the plan for 2022.

“I think when they first embarked on the negotiated regulation, the feeling was that it wouldn’t actually go into effect until July 2025,” Meyer said, but she suspects the government will “take advantage of this ‘good cause’ exemption in administrative regulation provisions that allow some regulations to take effect sooner.”

When Biden’s previous universal forgiveness plan began in October 2022, it was just an application that borrowers had to fill out and distribution of relief would take longer.

Experts say if this relief is implemented more quickly, the plan will be more effective.

“I think one of the challenges with the way the 2022 proposal was implemented is that it took a while for the relief to happen and therefore it gave time for the lawsuits to emerge,” Meyer said, adding that it is “easier to start a legal action” before the pardon is granted than after.

“So I imagine the government is ready to […] move forward with the pardon process as much as possible, because then it becomes more politically challenging and administratively more challenging” to turn back, she continued.

Biden has already distributed $153 billion in student debt relief during his administration, much of it going to those with IDR plans, borrowers with disabilities and people defrauded by their schools.

The most recent relief came on Friday, when Biden said he would forgive about $7 billion in loans worth about $277,000 in IDR plans.

Republicans have already been adamant that the new, broader proposal is just another scheme for the Biden administration to win votes. They say it is unfair to those who have paid their debts or never attended school.

“We know that instead of doing its job, the administration has focused time, energy and resources on its illegal student loan scheme. And that has been frustrating, especially because it has put the academic journey of millions of students at risk,” said Rep. Virginia Foxx (R-N.C.), chairwoman of the Education and Workforce Committee, referring to the failed Free Application for o Federal Student Aid Implementation.

The White House is already expecting legal challenges from Republicans, but projects confidence that this time they will fail.

“We know what the Republicans are going to do; we can’t stop them from that. But it also won’t stop the president from acting and taking action, as he is doing today,” said Biden press secretary Karine Jean-Pierre.

And the law on which the White House bases its new plan could provide it with a more solid foundation.

In 2022, the government attempted to use the emergency powers granted to the Secretary of Education during the pandemic to provide relief. This time, Biden is making use of the Higher Education Act (HEA).

The current plan uses “the authority the U.S. Department of Education has to correct current flaws in the student loan system” and “to initiate the SAVE plan that replaces an existing plan,” said Skye Perryman, president and CEO of Democracy Forward .

The SAVE plan is a new IDR plan launched by the administration last year that stops the growth of unpaid interest and reduces payments from 10% to 5% of discretionary income. Although two cases led by Republican states were recently filed to block the SAVE plan, Biden has not been ordered to stop it.

“The mechanisms by which the administration uses the Department of Education’s authority here” differ from those during the pandemic, Perryman said. “And so I think there is an incredibly strong legal basis…it’s on a solid legal basis.”

Ultimately, this plan could affect 30 million borrowers out of the more than 40 million Americans who have student loan debt.

“The scale is not small at all […] But all paths are legally sound that the Biden administration has taken through the regulatory process, including negotiated rulemaking, which included stakeholder meetings and public input throughout the fall and there will be more opportunities for public input so that they are following the letter of the law in developing and enforcing these regulations,” said Sara Partridge, senior policy analyst at the Center for American Progress.