Biden reveals new student debt relief
Program more likely to survive legal challenges
MADISON, Wis. — President Biden on Monday announced a large-scale effort to help pay off federal student loans for tens of millions of American borrowers, seeking an election-year boost by returning to a 2020 campaign promise that was blocked by the Supreme Court last year.
Biden’s new plan would reduce the amount that 25 million borrowers still owe on their undergraduate and graduate loans. It would wipe away the entire amount for more than 4 million Americans. Altogether, White House officials said, 10 million borrowers would see debt relief of $5,000 or more.
“While a college degree still is a ticket to the middle class, that ticket is becoming much too expensive,” Biden said during a speech to a small but enthusiastic audience of supporters. “Today, too many Americans, especially young people, are saddled with too much debt.”
Biden announced the plan in Madison, Wis., the capital of a critical swing state and a college town that symbolizes the president’s promise to make higher-education affordability a cornerstone of his economic agenda.
But it is a promise he has failed to achieve, largely because of legal challenges from Republicans and other critics. They accuse Biden of unlawfully using his executive authority to enact a costly transfer of wealth from taxpayers who have not taken out federal student loans to those who have.
Officials did not say how much the new plan would cost in coming years, but critics have said it could increase inflation and add to the federal debt by billions of dollars.
Biden said his new effort would help the economy by removing the drag of enormous debt from people who would otherwise not be able to buy a home or pursue a more economically sound future.
“We’re giving people a chance to make it,” Biden said. “Not a guarantee. Just a chance to make it.”
Biden’s announcement was a presidential do-over. In the summer of 2022, he put in motion a plan to wipe out $400 billion in student debt for about 43 million borrowers. That was blocked by the Supreme Court, which said he exceeded his authority. In the months since, Biden has waived small amounts of debt using existing programs. But now he is attempting a larger effort closer to the scale of his first try.
The original plan relied on a law called the HEROES Act, which the administration argued allowed the government to waive student debt during a national emergency like the COVID pandemic. The justices disagreed after Republican attorneys general and others challenged the debt waiver plan.
The new approach is different.
For months, Biden’s Education Department has been developing regulations using a long process authorized by the Higher Education Act. Instead of an across-the-board waiver of debt, the new approach targets five groups of borrowers: those whose loans have ballooned because of interest; borrowers who have been paying for decades; those who have economic hardship; people who qualify for existing debt relief programs but have not applied; and people whose loans come from schools that have since been denied certification or have lost eligibility for federal student aid programs.
Administration officials said because the new approach is based on a different law, it is more likely to survive the expected challenges. They said lawyers for the White House and the Education Department have studied the Supreme Court ruling and have designed the new program to make sure it does not violate the principles laid out by the justices.
But lawyers for those who oppose the approach are likely to argue that waiving the debt is unfair to those who already paid back their loans or never took out college loans in the first place. That argument helped sway the justices in the last case.
Neal McCluskey, the director of the Center for Educational Freedom at the Cato Institute, called the new plan “dangerous policy” that is unfair to taxpayers and would cause colleges and universities to raise their prices.
“The Constitution gives Congress, not the president, the authority to enact law, and the Supreme Court has already struck down a unilateral, mass student debt cancellation scheme by the Biden administration,” he said. “It would stick taxpayers with bills for debts other people chose for their own financial advancement.”
The legal challenges will likely take months to resolve, and that could leave the debt relief plan in limbo as voters go to the polls in November to choose between Biden and former president Trump.
Members of Biden’s administration fanned out across the country on Monday to talk about the new plan, betting that it will rally support among voters who were disappointed that the court blocked the first one, which would have eliminated up to $20,000 in debt for tens of millions of borrowers. Vice President Kamala Harris held a roundtable discussion in Philadelphia. Education Secretary Miguel Cardona spoke in New York City.
But beyond the threat of legal action, the president faces steep obstacles just because of the calendar. The new plan has not yet been published in the Federal Register, which will kick off a required, monthslong public comment period before it can take effect. Officials said Sunday only that they hoped some of the provisions would begin going into effect in “early fall” of this year.