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Biden administration looks for other avenues for student loan relief after Supreme Court ruling

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The Biden administration has begun exploring alternative routes to student debt relief.

This comes after the controversial but expected decision rendered by the Supreme Court, which struck down President Biden’s original student loan forgiveness plan. That plan was supposed to forgive up to $10,000 in federal student loans for most eligible borrowers and up to $20,000 for Pell Grant recipients. However, the Supreme Court says that the COVID-19 era HEROES Act, under which the plan was authorized, does not grant the Secretary of Education the ability to cancel student loan debt.

“The Secretary asserts that the HEROES Act grants him the authority to cancel $430 billion of student loan principal. It does not,” Chief Justice John Roberts wrote in the majority opinion. “We hold today that the Act allows the Secretary to ‘waive or modify’ existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, not to rewrite that statute from the ground up.”

While President Biden made it clear that he considered the court’s decision “a mistake,” he has now shifted to a new avenue to provide relief to borrowers, the Higher Education Act of 1965 (HEA). The act broadly covers many aspects of higher education but notably authorizes low-interest loans for students. The Biden administration believes they can use HEA to accomplish their original goal but not without obstacles.

“We will ground this new approach in a different law than my original plan, the so-called Higher Education Act. That will allow Secretary Cardona, who is with me today, to compromise, waive, or release loans under certain circumstances,” said Biden in a White House briefing following the decision. “This new path is legally sound. It’s going to take longer, but in my view, it’s the best path that remains to provide debt relief for as many borrowers as possible.”

The plan will take more time to come to fruition because there is a “negotiated rulemaking” process for making changes under HEA. However, the Biden administration also announced immediate protections for borrowers by creating a 12-month “on-ramp” repayment program. Under this program, payments will be due, but borrowers who miss payments will not suffer a default or be referred to credit agencies. The plan also provides that borrowers on the income-driven repayment plan will pay no more than 5 percent of their disposable income, as opposed to the previous 10 percent.

“It’s now the most generous repayment program ever,” said Biden. “No one with an undergraduate loan today or in the future, whether from a community college or a four-year college, will have to pay more than 5 percent of their disposable income to repay their loan.”

Republicans have criticized Biden’s efforts to forgive student loans on both legal and ethical grounds, contending that forgiving loans simply isn’t fair to taxpayers. So, it is likely that another avenue would still face a legal challenge, and the 6-3 conservative majority on the bench has been openly skeptical of the Executive Branch’s ability to forgive federal student loans on a large scale.

Contact Indy Kids Winning Reporter Andrew Pillow at andrewp@indyrecorder.com. Follow him on Twitter @AndrewPillow.

Andrew’s work is supported through a partnership between Indy Kids Winning and the Indianapolis Recorder. Visit indykidswinning.com to learn more.

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