Biden Administration wants to Forgive $39 Billion in Student Debt
Written by JAMM on July 16, 2023
While Congressional Republicans are applauding the recent Supreme Court ruling blocking the Biden administration’s college student loan forgiveness initiative, Democrats are already working on a Plan B effort to circumvent that decision.
“I’ve heard from countless constituents on this matter,” says Utah’s own Rep. Blake Moore (R-UT), “and I share their frustration that (the Biden loan forgiveness plan) was simply unfair.
“It would not have fixed the root causes of skyrocketing tuition or reduced costs for those who are entering higher education.”
Rep. Virginia Foxx (R-NC) agrees with Moore, but phrases her arguments in terms of dollars and cents.
Thanks to the recent Supreme Court ruling, she explains, “… hardworking taxpayers, including the 87 percent of Americans who hold no federal student debt, won’t be forced to foot the cost of (President Joe) Biden’s $315 billion boondoggle.
It’s time for individual responsibility, not more government dependence
“Simply put, it’s time for individual responsibility, not more government dependence.”
For Democrats, however, fulfilling Biden’s campaign promise of student loan forgiveness campaign could spell the difference between victory and defeat in the upcoming 2024 presidential election.
“Student loan debt relief brought out young voters in such a way that it literally stemmed the tide of the red wave in 2022,” said Braxton Brewington, a spokesperson for the Debt Collective, a national union of debtors.
If you deliver this relief, it’s going to really help Democrats in 2024
“I think you can make a really strong argument that if you deliver this relief, it’s going to really help Democrats in 2024.”
Democratic strategists agree, acknowledging that women, African-Americans and Latino borrowers – key members of the Democratic Party’s base – are likely to be among the beneficiaries of student debt forgiveness.
As announced in the summer of 2022, the Biden administration had pinned its hopes of providing student debt relief on a 2003 federal law that allowed Secretary of Education Miguel Cardona to cancel student loan debt for borrowers who faced hardship because of national emergencies.
That would have forgiven up to $20,000 of debt for up to 16 million student borrowers, but a slew of lawsuits challenged that program.
Federal judges rejected most of those suits, but a three-judge panel from the 8th Circuit Court ruled that attorneys general from Missouri, Arkansas, Nebraska, Iowa, Kansas and South Carolina had legal standing to challenge the Biden administration.
In a 6-to-3 ruling issued by the Supreme Court on June 30, the justices agreed that Biden did not have the authority to cancel $430 billion under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003.
Biden’s Plan B will now rely on the Higher Education Act of 1965 as a mechanism to allow the Department of Education to “compromise, waive or release loans under certain circumstances.”
This new path is legally sound
“This new path is legally sound,” the president promised in a June 30 speech following the High Court ruling. “It’s going to take longer. But, in my view, it’s the best path to (provide debt forgiveness) for as many borrowers as possible.
By executive order, the president had paused student loan payments and the accruing of interest on those loans during the economic disruptions of the COVID-19 pandemic.
Under the Higher Education Act, Cardona is empowered to develop rules for the new student loan relief programs. But Biden administration officials could not say how many people would be eligible nor how long it would take to design and implement that program.
In the meantime, Biden says that the Education Department would not refer borrowers who fall behind on loan payments to credit agencies for 12 months, providing a financial buffer once the pandemic-related pause ends.
The accruing of interest on student loans is slated to resume in September and payments will be due in October.
Biden also says that he intends to campaign on the student debt forgiveness issue in coming months. that effort will be an attempt to shift the growing frustration of youthful voters from the White House to Republicans.
“More homes would have been bought (with loan forgiveness),” the president argues. “More businesses would have been started. More couples would have had the confidence to support a family.
“The Republicans blocked all that.”
But Moore insists that he stands with fellow Republicans in support of the Supreme Court ruling against Biden’s loan forgiveness plan.
“Our higher education strategy should focus on return on investment and productive tuition assistance programs that set students up to succeed,” he adds.