The United States President Joe Biden’s administration has unveiled plans to eliminate an estimated $39 billion in student debt, marking a significant move towards fulfilling one of the core campaign promises of the Democratic Party.
The announcement, made by the Department of Education on Friday, aims to benefit approximately 804,000 borrowers enrolled in federal income-driven repayment plans. These plans adjust the monthly repayment amounts based on the borrower’s salary and family size, reports the Guardian.
While the department positioned Friday’s decision as an effort to rectify past injustices, it acknowledged the flaws in the current regulations. Presently, borrowers become eligible for student loan forgiveness after making 240 to 300 monthly payments, equivalent to roughly 20 to 25 years. After this period, the remaining debt is typically forgiven.
However, the department highlighted the issue of “inaccurate payment counts” resulting in borrowers losing progress towards loan forgiveness. In a press release, Under Secretary of Education James Kvaal emphasized the importance of fulfilling the promises made to borrowers who have diligently made loan repayments over several decades. He stated, “At the start of this Administration, millions of borrowers had earned loan forgiveness but never received it. That’s unacceptable.”
Supreme Court Setback
This move represents the Biden administration’s latest effort to tackle a key component of its domestic economic agenda, which aims to alleviate the burden of student debt for many households. However, the administration encountered a significant setback last month when the Supreme Court ruled that it lacked constitutional authority to eliminate nearly $400 billion in student debt.
President Biden had sought to utilize the powers granted by the Higher Education Relief Opportunities for Students Act of 2003, which allows the Secretary of Education to offer relief or waive financial aid for recipients during national emergencies. Citing the COVID-19 pandemic, Biden unveiled a plan in August 2022 to wipe out $10,000 to $20,000 in federal student loan debt for borrowers earning less than $125,000, estimating that approximately 43 million people would benefit from this proposal.
Nevertheless, the conservative majority of the Supreme Court, in a 6-3 decision, ruled that the plan exceeded Biden’s executive authority. The court argued that there was no “clear congressional authorization” for the debt relief initiative.
BREAKING: President Biden makes a stunning announcement that his administration will forgive $39 billion in student debt for 804,000 borrowers.
This historic relief will be provided on income-driven repayment plans, in which the federal government cancels borrowers' outstanding… pic.twitter.com/Z5C66FEcaZ
— Occupy Democrats (@OccupyDemocrats) July 14, 2023
Despite the setback, President Biden expressed his dissatisfaction with the court’s decision and vowed to explore alternative pathways for student debt relief. In a speech on June 30, he acknowledged the disappointment felt by millions of Americans and blamed the Republican Party for obstructing the program while advocating for tax breaks for the wealthy.
Campaigning on ‘Bidenomics’
As President Biden campaigns for reelection in the 2024 presidential race, he has prioritized his economic platform, known as “Bidenomics,” despite facing criticism regarding high inflation and government spending. The total amount of federal student loans stands at approximately $1.6 trillion, impacting nearly 45 million individuals, according to White House estimates from 2022.
Republicans swiftly criticized the latest debt-relief effort, condemning it as another instance of the Biden administration overstepping its authority. Representative Lisa McClain of Michigan expressed her opposition on Twitter, stating, “Biden’s unconstitutional loan forgiveness scheme is a slap in the face to hard-working taxpayers that have dutifully paid off their student loans.” She pledged to fight against what she called “blatant overreach.”
Even fellow Democrat and presidential candidate Marianne Williamson voiced her discontent, remarking on Friday, “Be of good cheer, kids. You’ll get relief in 20 or 25 years!”
