Biden defies Supreme Court, vows $39bln to cancel student loans

By Al Mayadeen English
Source: News Website
15 Jul 2023 16:01

Within hours of the Supreme Court ruling, President Biden pursues a “new path” to give borrowers relief using a different law, the Higher Education Act.

President Joe Biden from the Oval Office of the White House in Washington, Friday, June 2, 2023 (AP)

The Biden administration announced Friday that it will forgive the student loans of more than 800,000 borrowers, wiping out $39 billion in debt.

Last year, the Education Department made an initial declaration of a one-time modification aimed at rectifying payment count discrepancies for borrowers enrolled in income-driven repayment plans or individuals eligible for debt-relief programs. These plans offer forgiveness upon completing a specific number of monthly payments, usually within 20 or 25 years.

“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress toward forgiveness. By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve," Education Secretary Miguel Cardona said in a statement Friday.

Some Republicans have expressed criticism of Friday's announcement, citing the fact that it comes two weeks after the Supreme Court rejected a broader proposal from the Biden administration. The rejected plan aimed to forgive over $400 billion in federal student loan debt.

Within hours of the ruling, President Biden said he would pursue a “new path” to give borrowers relief using a different law, the Higher Education Act.

The administration argued that the Higher Education Relief Opportunities for Students Act of 2003 granted the Department of Education the authority to forgive the debt. However, critics contended that the plan placed the burden of unpaid debt on taxpayers and viewed the effort as an attempt to exploit loopholes in legislation to implement extensive changes that would likely not pass through Congress.

“In the wake of the court decision, the administration is really abusing its authority and trying to give people breaks that they didn’t earn,” said Lindsey Burke, director of the Center for Education Policy at the Heritage Foundation. “This is ultimately going to continue to drive up college tuition and drive up prices and is going to lay the groundwork for more borrowers to demand loan cancellation in the future.”

Slamming the move as a "blatant political attempt to circumvent the Supreme Court" and "shameful", Virginia Foxx, chairwoman of the House Education Committee, said, "The Biden administration is trampling the rule of law, hurting borrowers, and abusing taxpayers. From day one, this administration has encouraged borrowers not to repay their loans and has expected taxpayers to foot the bill."

“Congress created these plans that provide debt relief to people who make payments based on their income for 20 to 25 years. … What we’re seeing today are some long-needed fixes to that program so that borrowers actually get the relief that Congress intended,” Abby Shafroth, director of the Student Loan Borrower Assistance Project, said.

“There might be a case against it on those grounds,” said Preston Cooper, a senior fellow in higher education policy with the Foundation for Research on Equal Opportunity

“Eligible borrowers will be informed by the Department starting today that they qualify for forgiveness without further action on their part,” the Department announced.

“I have long said that college should be a ticket to the middle class — not a burden that weighs down on families for decades,” Biden said in a statement. “My Administration is delivering on that commitment.”