What is the Higher Education Act and how does Biden intend to utilize it for addressing student debt?

President Biden’s Commitment to Student Loan Relief Continues

President Joe Biden made it clear that his efforts to provide much-needed relief to millions of student loan borrowers are far from over. Despite a recent Supreme Court decision blocking his current debt relief program, Biden remains determined to find alternative solutions.

His next move involves leveraging the power of the 1965 Higher Education Act, which grants Education Secretary Miguel Cardona the authority to “compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.”

What is the Higher Education Act?

The Higher Education Act was established in 1965 as part of President Lyndon B. Johnson’s domestic agenda. Its primary goal was to provide financial assistance to college students, offering low-interest loans and creating new scholarships.

One crucial aspect of this legislation is that it does not require a national emergency to address student loans. In contrast, the previous law Biden attempted to invoke, known as the HEROES Act, only allowed Cardona to “waive or modify” federal student loan provisions during a national emergency.

Democratic lawmakers, including Sen. Elizabeth Warren (D-MA), have been advocating for the use of the 1965 law as the foundation for a student loan forgiveness program since 2021.

The Biden Administration’s Latest Actions on Student Loan Relief

The president recently announced that Cardona has already taken the first two steps under the proposed program. This includes initiating a rule-making process aimed at providing an alternative path to debt relief for working and middle-class borrowers.

Cardona has also finalized a repayment plan that reduces the amount borrowers need to repay in each check, lowering it from 10% to 5% of their discretionary income. Additionally, many borrowers will have the option to make $0 monthly payments, and unpaid monthly interest will not be charged if they make their monthly payment, according to a White House Fact Sheet.

Another significant change is the introduction of a 12-month “on-ramp repayment program” that eliminates the risk of default for loan recipients who are unable to meet their payment obligations. During this period, the Department of Education will not report missed payments to credit agencies, allowing borrowers to readjust to making payments without facing immediate consequences.

The White House encourages borrowers to repay their loans if they can, but the new repayment program aims to assist borrowers in transitioning after the three-year repayment pause during the COVID-19 pandemic.

These new plans come in response to a 6-3 Supreme Court ruling that deemed the administration’s attempt to waive billions in student loan debt under the HEROES Act as an overreach of authority.

“I believe that the Court’s decision to strike down our student debt relief plan is wrong,” stated Biden. “But I will stop at nothing to find other ways to deliver relief to hard-working middle-class families. My Administration will continue to work to bring the promise of higher education to every American.”

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

*As an Amazon Associate I earn from qualifying purchases