Biden Announces He’ll Try Different Route To Student Debt Relief After Supreme Court Decision

WASHINGTON, DC - JUNE 30: U.S. President Joe Biden is joined by Education Secretary Miguel Cardona (L) as he announces new actions to protect borrowers after the Supreme Court struck down his student loan forgiveness... WASHINGTON, DC - JUNE 30: U.S. President Joe Biden is joined by Education Secretary Miguel Cardona (L) as he announces new actions to protect borrowers after the Supreme Court struck down his student loan forgiveness plan in the Roosevelt Room at the White House on June 30, 2023 in Washington, DC. In a 6-to-3 decision, the court ruled the loan forgiveness program -- which was projected to help 40 million people and cost $400 billion -- was unconstitutional. (Photo by Chip Somodevilla/Getty Images) MORE LESS
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In the hours after the Supreme Court knocked down his student debt relief plan on Friday, President Joe Biden announced in an Oval Office speech that he’ll take a different pathway to forgive the loans. 

“We will ground this new approach in a different law than my original plan: the so-called Higher Education Act,” Biden said. “That will allow Secretary Cardona, who is with me today, to compromise, waive or release loans under certain circumstances.” 

“This new path is legally sound,” he added. “It’s gonna take longer — but in my view, it’s the best path that remains to provide as many borrowers as possible with debt relief.”

The White House released limited details of the plan on Friday. But the Department of Education had already initiated the rulemaking process for the new student loan forgiveness program, which will start with a virtual public hearing on July 18. 

That plan, Biden said, will be coupled with another: a one-year “on-ramp repayment program.”

According to the White House, the new repayment program will run from October 1, 2023 to September 30, 2024 so “financially vulnerable borrowers who miss monthly payments during this period are not considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies.”

The administration also finalized what it’s touting as the “most affordable repayment plan ever created” to cut the amount borrowers have to pay each month, forgive debts after 10 years of payments instead of 20 for certain borrowers and not charge borrowers unpaid monthly interest.

The new path to relief seems to hinge on the Higher Education’s Act “compromise and settlement” authority, which some scholars have interpreted to give the Education Secretary broad latitude to waive debts. The longer process Biden alludes to is likely the rule-making and congressional review process for the agency action. 

If the new pathway is finalized, it will almost certainly also be challenged in court. The Supreme Court rejected Biden’s old student debt plan Friday in large part due to the major questions doctrine, a right-wing theory that lets the Court stop deferring to agencies when their actions are of “economic or political significance” — a vague threshold the right-wing majority has frequently used to knock down Biden administration agency actions.

Biden juxtaposed his attempts to get relief Friday — heavily opposed by Republicans — with many of those congressional Republicans’ netting of Paycheck Protection Program (PPP) loans during the pandemic.

“I’m never gonna stop fighting for you,” he said to the camera. “We’ll use every tool at our disposal to get you the student debt relief you need.” 

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