Federal agency proposes new student loan rules following Supreme Court order.
The Biden administration has made significant revisions to its student loan relief plan following its rejection by the U.S. Supreme Court earlier this year.
On Monday, the Department of Education (DOE) released a draft text that revealed a narrower approach to student debt forgiveness. Instead of a blanket rule that would cancel debt for 45 million borrowers, the new plan would only apply to specific groups of students.
The original proposal, announced by President Joe Biden, promised up to $20,000 in debt relief for low- and middle-income individuals. However, the Supreme Court struck it down in June.
Secretary of Education Miguel Cardona expressed the administration’s commitment to helping borrowers who have been failed by the student loan system. He stated that the draft proposals would build upon the $127 billion in loan forgiveness already approved for nearly 3.6 million borrowers by the Biden-Harris Administration.
The full details of the plan have not yet been released by the DOE. However, it aims to cancel some or all student debt for borrowers in specific categories, such as those with balances exceeding their original amount, those with loans from 25 or more years ago, and those who attended career-training programs that resulted in excessive debt or insufficient earnings. The plan also considers borrowers eligible for other loan forgiveness programs who did not apply, as well as those facing financial hardship not adequately addressed by the current system.
The draft does not provide information on the number of borrowers affected by the new plan or its cost.
The DOE intends to refine the proposal through a federal rulemaking process and will seek written feedback from the public next year. If implemented, the proposal would grant the department the authority to completely eliminate federal student loans for certain borrowers.
The Biden administration has already canceled over $120 billion in federal student loan debt through existing forgiveness programs for specific individuals.
While President Biden initially called for a plan to assist as many borrowers as possible, his administration appears to be moving away from mass cancellation. The estimated cost of the previous $400 billion plan is unknown for the revised proposal.
Since October, federal student loan payments have resumed after being paused due to the COVID-19 pandemic. However, concerns have been raised about potential issues as loan servicers, who are understaffed, handle the repayment of millions of borrowers simultaneously.
Opponents of the plan argue that it is unfair to those who do not require debt relief or have already repaid their loans. They accuse the Biden administration of using it as a means to gain favor with college-age voters. Some also claim that it places an unjust burden on taxpayers who did not attend college and worry that it may incentivize universities to further increase tuition prices.
Representative Virginia Foxx (R-N.C.) criticized the administration, stating, “Taxpayers just got sucker punched—again—by this administration,” in reference to an earlier version of the plan. “Today, President Biden announced that taxpayers will be forced to pay for the costliest regulation in our nation’s history.”
Supreme Court’s Ruling
In a 6–3 ruling against the original $400 billion plan, the Supreme Court declared that the administration had exceeded its authority and bypassed Congress. Chief Justice John Roberts wrote, “The authority to ‘modify’ statutes and regulations allows the Secretary to make modest adjustments and additions to existing provisions, not transform them.”
The Biden administration had relied on the HEROES Act, a federal statute, to propose the initial plan, but the court ruled against it.
Justice Elena Kagan dissented, arguing that it was the Supreme Court, not the federal government, that engaged in ”overreach.” She stated, “The plaintiffs in this case are six States that have no personal stake in the Secretary’s loan forgiveness plan. They are classic ideological plaintiffs: They think the plan a very bad idea, but they are no worse off because the Secretary differs.”
The Associated Press contributed to this report.
What specific groups of students will be eligible for debt forgiveness under the new plan?
The Biden administration has made significant revisions to its student loan relief plan following its rejection by the U.S. Supreme Court earlier this year. On Monday, the Department of Education (DOE) released a draft text that revealed a narrower approach to student debt forgiveness. The new plan would only apply to specific groups of students, rather than a blanket rule that would cancel debt for 45 million borrowers.
The original proposal, announced by President Joe Biden, promised up to $20,000 in debt relief for low- and middle-income individuals. However, the Supreme Court struck it down in June.
These revisions to the student loan relief plan reflect the Biden administration’s efforts to find a more targeted approach to addressing the issue of student debt. By focusing on specific groups of students, the plan aims to provide relief to those who are most in need.
While the original proposal aimed to provide debt relief to a wide range of borrowers, the narrower approach acknowledges that not all borrowers face the same financial challenges. By targeting specific groups, such as low-income borrowers or those who attended for-profit colleges, the plan aims to address the unique circumstances faced by these individuals.
The release of the draft text by the DOE marks an important step in the process of revising the student loan relief plan. It signals the administration’s commitment to finding a workable solution that can pass legal scrutiny. By taking into account the Supreme Court’s rejection of the original proposal, the Biden administration is adjusting its approach to ensure that any new plan can withstand legal challenges.
However, it is worth noting that the revised plan may still face opposition and criticism. Critics argue that the narrower approach may exclude borrowers who are also in need of debt relief. They argue that debt cancellation should be a broader and more inclusive solution.
The student loan relief plan is a complex issue with far-reaching implications. It affects millions of borrowers and has significant economic consequences. As the Biden administration continues to work on finalizing the revised plan, it is essential to consider the needs of all borrowers and ensure that any solution is fair and equitable.
In conclusion, the Biden administration’s revisions to the student loan relief plan reflect a more targeted approach to addressing the issue of student debt. By focusing on specific groups of students, the plan aims to provide relief to those who are most in need. However, the revised plan may still face opposition and criticism, as some argue for a broader and more inclusive solution. As the administration finalizes the plan, it is crucial to consider the needs of all borrowers and ensure a fair and equitable solution.
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