High court defeat spurs new action from Biden on student debt relief

WASHINGTON (CN) — President Joe Biden announced new action on student loan debt relief Friday after the Supreme Court shut down his attempt to forgive loans for millions of Americans.

“Today’s decision has closed one path; Now we’re going to pursue another,” Biden said Friday afternoon in an address at the White House.

Earlier in the day, the Supreme Court closed out its term by handing down a closely watched ruling on Biden’s effort to give student loan borrowers relief from mounting debt. In a 6-3 vote, the conservative majority found Biden did not have the authority to forgive loans under the Higher Education Relief Opportunities for Students Act of 2003. Biden’s effort would have deleted $10,000 in debt from borrowers earning below $125,000, with an additional $10,000 cut to low-income borrowers who received Pell Grants.

Biden announced Friday that he has instructed Education Secretary Miguel Cardona to initiate a new path for student debt relief under the Higher Education Act.

“I’m announcing today a new path consistent with today’s ruling to provide student debt relief to as many borrowers as possible as quickly as possible,” Biden said.

Under the HEA, Biden said Cardona will be able to compromise, release, waive or release loans under certain circumstances. Biden did not give any details on what circumstances would be considered under the new plan or how much debt could be forgiven. He did, however, say this option would take longer to implement than his previous plan.

“We’re not going to waste any time on this,” Biden said. “We’re getting moving — it’s going to take longer — but we’re getting at it right away.”

An action that borrowers will see more immediately is Biden’s change to loan repayment plans. The administration finalized limits on borrowers’ loan repayment. Instead of setting that bar at no more than 10% of borrowers’ disposable income, Biden lowered the limit to 5%. Biden estimates that this should save borrowers about $1,000 a year.

For borrowers who are not able to make their loan repayments, Biden announced a 12-month “on-ramp” program that will prevent missed payments from hurting borrowers’ credit. Biden clarified that this is not a pause — as has been in effect for over three years — but instead a way for borrowers to figure out how to start making payments without facing financial hardship.

“If you can pay your monthly bills, you should, but if you cannot, if you miss payments, this on-ramp will temporarily remove the threat of default, or having your credit harm which can hurt borrowers for years to come,” Biden said.

Biden commiserated with Americans who were disappointed by Friday’s Supreme Court ruling.

“Sixteen million people had already been approved,” Biden said. “The money was literally about to go out the door, and then Republican elected officials and special interest stepped in.”

Likening his loan-forgiveness program to Covid business relief loans, Biden argued debt relief for student loan borrowers should have been approved.

“These Republican officials just couldn’t bear the thought of providing relief for working-class and middle-class Americans,” Biden said.

Biden even noted some Republicans in Congress who received hundreds of thousands, and even over a million dollars, in pandemic loans that were ultimately forgiven.

“Some of the same elected Republican members of Congress who strongly opposed giving debt relief to students got hundreds of thousands of dollars themselves … because of the businesses they were able to keep open,” Biden said. “Several members of Congress got over a million dollars. All those loans are forgiven.”

Openly critical of the Supreme Court as well, Biden groused that the conservative majority had misinterpreted the Constitution in its ruling.

“Hope on the horizon thanks to relief in my plan last year, today’s court decision snatched away from them,” Biden said.

Despite the loss, Biden said he would keep fighting.

“I’m never going to stop fighting for you,” Biden said. “We’ll use every tool at our disposal to get you the student debt relief you need to reach your dreams. It’s good for the economy. It’s good for the country. It’s going to be good for you.”

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