Now That Biden’s Student Loan Forgiveness Has Been Shot Down by SCOTUS, What’s His Next Move for Borrowers?

Young multi-ethnic group of people doing a research on student loans.
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President Joe Biden wasted no time blasting the U.S. Supreme Court’s decision to strike down his federal student loan forgiveness plan, saying the court “misinterpreted the constitution” in ruling against the plan last week and vowing to pursue another path to loan relief for millions of borrowers.

The ruling, which came on Friday, June 30, was not unexpected. Most legal experts predicted the conservative-majority SCOTUS would rule against Biden’s loan relief program, which aimed to forgive up to $20,000 in debt per borrower.

More than 45 million borrowers owe $1.6 trillion in federal college loans, The New York Times reported, citing government data. The debt relief program Biden unveiled last summer would have been one of the most expensive executive actions in U.S. history — which was why many Republicans opposed it and a big reason the Supreme Court ruled against it.

The court’s 6-3 decision not only represented a setback for Biden ahead of the 2024 presidential election. It also delivered a financial blow to the 16 million borrowers who had already been approved for debt forgiveness, The Guardian reported.

More homes “would’ve been bought” and more businesses started had student loans been forgiven, Biden said in remarks delivered at the White House.

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“I think the court misinterpreted the constitution,” he added.

Biden now plans to move forward with a new strategy to provide student loan relief that will center on the Higher Education Act of 1965, the AP reported. Biden called it “the best path that remains to provide as many borrowers as possible with debt relief.”

He added that the new programs will take longer to ease student loan debt than his original loan forgiveness program and blamed Republicans for leading efforts to overturn it.

“These Republican officials just couldn’t bear the thought of providing relief for working-class, middle-class Americans,” Biden said. “The hypocrisy of Republican elected officials is stunning.”

The president also plans to implement a 12-month repayment program to help people with student debt avoid defaulting on their loans, according to The Guardian — a major concern at the U.S. Department of Education, which has said that blocking the forgiveness program could lead to a “historically large increase” in delinquencies and default.

Federal student loan payments are set to resume in October 2023 following a payment pause that began in March 2020.

As the AP noted, many progressives have long argued that the Higher Education Act is the best path to loan forgiveness, but the Biden administration resisted using it because it would take longer to implement on a wide scale. The approach uses a provision that would let Education Secretary Miguel Cardona “compromise, waive or release” student loans, according to the AP. The administration used the same strategy last year to forgive $6 billion in loans for borrowers who were deceived by their colleges.

The details of the new forgiveness plan will be negotiated through a federal rulemaking process that the White House launched Friday, following the SCOTUS decision. The process lets the Education Department write or change federal regulations with the “weight of law,” the AP reported.

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But borrowers shouldn’t get their hopes up yet. Although the Higher Education Act has been used to cancel student debt before, it has never been done at the scale that the Biden administration targets. In 2021, Trump administration lawyers concluded that the education secretary “does not have statutory authority to provide blanket or mass cancellation” under the act.

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