President Biden has quickly pivoted to Plan B after the Supreme Court struck down his student loan forgiveness plan.
Mr. Biden announced Friday that he’ll enact a different student debt relief program under a 1965 law, the Higher Education Act. Democrats including Sen. Elizabeth Warren of Massachusetts and Rep. Alexandria Ocasio-Cortez of New York had been repeatedly urging Mr. Biden to turn to the Higher Education Act if the Supreme Court killed his student loan relief plan.
The president said the new solution will likely take longer to implement. In the meantime, Mr. Biden outlined a temporary plan to help those who can’t pay their bills when loan payments restart in October after a three-year pause.
He said the administration will create a 12-month “on-ramp repayment program” that will remove the threat of default for many borrowers.
“Today’s decision has closed one path. Now we’re going to pursue another,” Mr. Biden said of the Supreme Court ruling in remarks from the White House. “We will use every tool at our disposal to get you the student debt relief you need and reach your dreams.”
Mr. Biden had centered his debt forgiveness plan around the 2003 Higher Education Relief Opportunities Act, which requires the existence of an emergency such as the COVID-19 pandemic to cancel student loan debt.
The Higher Education Act requires no such conditions and has been used to cancel student debt in limited cases.
Last year, the Department of Education forgave $6 billion in loans for defrauded students under the Higher Education Act. In 2019, then-President Donald Trump used it to eliminate student loan debt for 25,000 disabled veterans.
Pursuing such a plan via the Higher Education Act could be time-consuming because it requires a lengthy rulemaking process and comment period that could take roughly a year, delaying any potential relief until at least 2024. Litigation by those opposed to the program could drag things out even longer.
“We know that figuring out how to pay these expenses can take time for borrowers, and they might miss payments at the front end as they get back into repayment,” Mr. Biden said in a news briefing Friday. “This could lead borrowers to fall into delinquency and default. That’s not good for them or the economy.”
There are no assurances. however, that invoking the Higher Education Act won’t meet the same fate as Mr. Biden’s previous plan. In his 6-3 opinion Friday, Chief Justice John G. Roberts Jr. noted the constraints of the Higher Education Act, which he said applies only to some public servants, borrowers who have died or become disabled, borrowers who are bankrupt, and those who have been defrauded.
Still, Mr. Biden said Friday that his new path forward is “legally sound” and “the best path forward.”
“We’re not going to waste any time on this. We’re going to be moving and it’s going to take longer, but we are getting to it right away,” he said.
Mr. Biden also announced that borrowers will have a 12-month grace period once payments resume in October. Under the temporary plan, the Education Department will not refer borrowers who miss student loan payments to credit agencies for a full year, averting a financial crunch for some borrowers until just before the presidential election in 2024.
Mr. Biden said the program will give students a chance to get back up and running.
“If you can pay your monthly bills, you should, but if you cannot, if you miss payments, this on-ramp temporarily removes the threat of default or having your credit harmed,” Mr. Biden said.
Bharat Ramamurti, deputy director of the White House’s National Economic Council, told reporters that the process of pursuing the Higher Education Act will take weeks, not months, with the first hearing on the rulemaking process scheduled for July.
Mr. Ramamurti said at the daily White House press briefing that the administration used the 2003 law because they thought it would be quicker and they had the authority to do it.
The president’s plan would have allowed eligible borrowers to cancel up to $20,000 in debt and would have cost more than $400 billion. It has been blocked since the 8th U.S. Circuit Court of Appeals issued a temporary hold in October. About 40 million Americans would have been eligible for the plan.
Mr. Biden on Friday did not offer any details about who would qualify or how much debt relief borrowers would receive under his new plan.
• Jeff Mordock can be reached at jmordock@washingtontimes.com.
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