



The Department of Education (DOE) issued a statement on Friday, detailing its plan to automatically forgive $39 billion in student loan debt for over 804,000 borrowers.
This decision comes in the wake of a Supreme Court ruling that curtailed the administration’s aspiration to forgive student loans for almost 40 million Americans.
The Supreme Court, with a 6-3 ruling this past June, stated that the Biden administration lacks the executive power to forgive up to $10,000 in student loan debt for those not receiving Pell Grants and up to $20,000 for those who do.
“Borrowers have for too long been overlooked by a system that lost track of their progress towards debt relief,” said Miguel Cardona, DOE secretary. He continued, “The Biden-Harris Administration is today taking an unprecedented step to rectify these wrongs by announcing a debt relief package of $39 billion for an additional 804,000 borrowers.”
The DOE, in response to the Supreme Court’s ruling, divulged a strategy in June to leverage the Higher Education Act and expand income-driven repayment plans.
The newly designed plan would reduce loan payments for those earning $32,800 or less annually to zero. Borrowers who default on their loan payments within the first year, beginning October 1st, will not face penalties, default status, or be reported to credit and collection agencies.
According to the DOE, this plan is anticipated to save borrowers at least $1,000 annually. However, a report from the Penn Wharton Budget Model suggests the long-term cost to taxpayers for these income-driven repayment plans could surpass the cost of one-time outright forgiveness.
“At the onset of this Administration, many borrowers who had earned loan forgiveness were denied their due relief. That’s not acceptable,” said James Kvaal, Under Secretary of Education.
He emphasized, “We are today honoring the commitment we made to borrowers who have shouldered decades of repayment.”
The Supreme Court’s ruling in June hinged on two cases, Biden v. Nebraska and Department of Education v. Brown, which questioned the Secretary of Education’s emergency authority to forgive student loan debt.
Republican North Carolina Representative Virginia Foxx was critical of the Biden administration’s move, stating on Friday, “The Biden administration’s overtly political maneuver to sidestep the Supreme Court is a disgrace.”
“The administration is trampling the rule of law, hurting borrowers, and burdening taxpayers to score political points. Biden’s student loan scheme is far from over,” she continued.
The Biden administration may think they have circumvented the highest court in our land by moving forward with their fiscally irresponsible agenda that is so detrimental to the taxpayers, it is likely to end up right back in court.


