On Friday, the Biden administration announced a new student loan forgiveness plan that promises to release nearly 800,000 borrowers from $39 billion in federal debt.
This latest effort to follow through on one of President Joe Biden’s longstanding campaign trail promises comes roughly one month after the Supreme Court struck down a much more wide-reaching proposal. As Valuetainment reported previously, Biden’s plan focused on canceling up to $20,000 of student loan debt for over 40 million Americans, roughly wiping over a quarter of the country’s $1.7 trillion in outstanding federal student debt.
The plan would cancel $10,000 in federal student loan debt for those earning less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, typically from lower-income households, were expected to receive an additional $10,000 in debt forgiveness, for $20,000.
However, in a historic series of rulings in the last week of June, the Court overturned Biden’s plan while also striking down affirmative action, upholding religious liberties in business and employment, and addressing partisan gerrymandering.
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In light of the Court’s ruling, Biden announced that a new workaround would have to be found before his promise could be fulfilled. This new plan is based on a different legal rationale than what the Court overruled, and it extends eligibility to anyone who has made payments “equivalent of either 20 or 25 years of qualifying months.”
“Under the Higher Education Act and the Department’s regulations, a borrower is eligible for forgiveness after making 240 or 300 monthly payments—the equivalent of 20 or 25 years on an IDR plan or the standard repayment plan,” the administration’s announcement said.
The hundreds of thousands of borrowers who are eligible under this new plan will be notified in the coming weeks. However, like the plans that have come before it, this proposal does little to address the central issue of student loan forgiveness: transferring the expense to the taxpayers. Nothing is ever free, and these debts will still need to be repaid.
All that remains to be seen is who exactly will be footing the bill under Biden’s latest plan.
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