Biden’s $39B Student Debt Plan – Will It Even Happen?

(DailyVantage.com) – President Biden will continue to pursue his administration’s new student loan forgiveness plan. After the Supreme Court (SCOTUS) dealt a setback to President Biden in Biden v. Nebraska, where the 6-3 ruling determined that the Secretary of Education cannot waive loans under the HEROES Act, Biden is attempting to use a plan to make a “one-time account adjustment,” which would allow for more than 800,000 borrowers to have $39 billion in student loan debt canceled.

The “one-time account adjustment” would classify nonpayment as a period during repayment, forgiving loans from borrowers in Income-Driven Repayment plans who have been paying for 20–25 years.

The Cato Institute and Mackinac Center for Public Policy, both free-market and libertarian-oriented organizations, filed a lawsuit that argued that Biden overstepped his authority, asserting that the Department of Education (DOE) cannot legally count non-payments during the payment period. The DOE slammed this as a right-wing political stunt to block student loan waivers and keep borrowers in debt. Michigan District Judge Thomas Ludington later declared that the lawsuit filed against the DOE lacked standing, throwing the case out.

Biden, in a statement on the issue, asserted that his administration has already approved $116.6 billion in debt cancellations for 3.4 million students and that he will bypass challenges from Republican elected officials and organizations that seek to stop him. Education Secretary Miguel Cardona has continued to say that the loan cancellation plan by the President is to address the failures of the student loan system.

This alternative path to pardoning student loans will wipe out the debt for 614,000 borrowers. Critics believe the debt forgiveness policy is a political move by the Biden administration ahead of the 2024 presidential election and an unsound economic move. Despite this, Biden’s approval remains a net negative of 13.3%, according to FiveThirtyEight, with 53.9% disapproving and 40.6% approving. While the DOE and Biden administration continue to pursue this path, Republicans will likely mount further challenges.