Republican presidential hopefuls cheered the Supreme Court decision that overturned President Joe Biden’s plan to provide debt relief for a large swath of federal student loan borrowers while Democrats called for measures to alleviate the financial burdens faced by hardworking Americans.
A press release issued by the Department of Education on June 30, 2023, announced that President Joe Biden has taken actions in support of student loan borrowers in response to the Supreme Court’s ruling to stymie administration efforts.
Environmental lawyer Robert F. Kennedy Jr. and author Marianne Williamson, the two Democratic candidates running against Biden for their party’s 2024 nomination, shared criticisms of his student loan forgiveness plan and offered their own solutions as presidential candidates.
The Supreme Court killed student loan relief when justices ruled in two cases challenging Biden’s authority to forgive federal student loans under a 2003 law called the HEROES Act.
All the Republican-nominated justices ruled against the president in Biden v. Nebraska, in which six Republican-led states alleged he exceeded his legal authority when he attempted to cancel up to $20,000 in debt for those holding federal student loans.
A second case, Department of Education v. Brown, which involved a lawsuit between two student loan borrowers who did not qualify for all or part of the relief and the Biden administration, resulted in a unanimous ruling against the students.
“The unfortunate SCOTUS ruling striking down President Biden’s student loan forgiveness program was the predictable result of Biden’s failure to bring Congress together on this issue of crucial importance to young Americans,” tweeted Kennedy. “President Biden knew his plan wouldn’t survive a legal challenge. His plan gave the appearance of action, while accomplishing nothing.”
Kennedy said he would “pressure Congress” to increase funding for education, going so far as to suggest that “a fraction of our military budget” could eliminate student loans.
“I will also take steps to reduce education costs for students. When I was their age, a college education cost about one-seventh of what it is today,” Kennedy said. “A young person could work their way through college and graduate debt-free. If we devoted even a fraction of our military budget to higher education, it could be virtually free to all (as it is in many other countries).”
He compared the proposed allotment toward student loans to funding “infrastructure and [the] environment” because “it is an investment in America’s future.”
Williamson declared that she would “expand the court,” to get around the latest rulings. “Today’s SCOTUS works to proactively diminish the rights and opportunities of the people of the United States,” she said. “Biden can get around this.”
“As President, I will expand the Court if necessary,” said Williamson. “Nothing in the Constitution says it’s limited to 9 justices.
We must also introduce ethics rules for SCOTUS justices, and consider term limits.”
The first action taken by the Biden administration is the initiation of a rulemaking process by the Secretary of Education.
This process aims to establish an alternative path to debt relief for working and middle-class borrowers, utilizing the Secretary’s authority under the Higher Education Act. By exploring innovative solutions, the administration seeks to extend debt relief to as many borrowers as possible.
Simultaneously, the Department of Education has finalized the implementation of the most affordable repayment plan ever created, known as the Saving on a Valuable Education (SAVE) plan.
This income-driven repayment plan is designed to significantly reduce borrowers’ monthly payments, offering substantial savings. Under the SAVE plan, the typical borrower can save over $1,000 annually. Additionally, the plan allows many borrowers to make $0 monthly payments, ensuring that their loan balances do not grow from unpaid interest.
Key features of the SAVE plan include:
- Halving the monthly payments for undergraduate loans from 10% to 5% of discretionary income.
- Expanding the definition of non-discretionary income to protect borrowers earning under 225% of the federal poverty level from making monthly payments.
- Forgiving loan balances after 10 years of payments for borrowers with original loan balances of $12,000 or less, providing relief to community college borrowers in particular.
- Preventing the accrual of unpaid interest, meaning borrowers’ loan balances will not increase as long as they make their monthly payments, even if the payment is $0 due to low income.
All student borrowers in repayment will be eligible to enroll in the SAVE plan. Enrollment will open later this summer, prior to the resumption of monthly payments. Borrowers currently enrolled in the Revised Pay as You Earn (REPAYE) plan will be automatically transferred to the SAVE plan once it is implemented.
Recognizing the challenges faced by financially vulnerable borrowers following the payment restart, the Department of Education is instituting a 12-month “on-ramp” to repayment.
From October 1, 2023, to September 30, 2024, borrowers who miss monthly payments during this period will not be considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies.
This measure aims to protect the most at-risk borrowers, giving them the necessary time to adjust and meet their financial obligations without facing severe consequences.
Biden’s commitment to student debt relief is reinforced by the administration’s previous efforts to make higher education more accessible and federal student loans more manageable.
These efforts include securing significant increases to Pell Grants, fixing broken loan forgiveness programs such as Public Service Loan Forgiveness, and approving over $66 billion in loan cancellations for 2.2 million borrowers, including public service workers and those defrauded by their colleges.
With the initiation of rulemaking, the implementation of the SAVE plan, and the introduction of the on-ramp period, Biden’s actions demonstrate his administration’s dedication to providing debt relief and support for student loan borrowers.
By easing the financial burden of student loans, the administration aims to ensure that education beyond high school remains an attainable path to the middle class.
“A president cannot just wave his hand and eliminate loans for students he favors, while leaving out all those who worked hard to pay back their loans or made other career choices,” said Nimarata Haley. “The Supreme Court was right to throw out Joe Biden’s power grab.”
“Today’s Supreme Court ruling overturning President Biden’s illegal student loan scheme is a victory for common sense,” said Sen. Tim Scott of South Carolina. “You take out a loan, you pay it back. This decision frees taxpayers from shouldering debt they never signed up for.”
“Joe Biden’s massive trillion-dollar student loan bailout subsidizes the education of elites on the backs of hardworking Americans, and it was an egregious violation of the Constitution for him to attempt to do so unilaterally with the stroke of the executive pen,” said former Vice President Mike Pence, who claimed that he “played a role in appointing three of the Justices that ensured today’s welcomed decision.”
“We have a bad habit in this country of paying people to do the exact opposite of what we would want them to do,” said billionaire Vivek Ramaswamy, who cashed in on drugs that were ultimately ineffectual for the treatment of Alzheimer’s disease. “America is a country where you achieve and get ahead based on your own hard work and commitment and dedication. We’re not going to pay you to do the other thing. That’s the country I’m going to create and help lead as your next president, and I think the Supreme Court is making my job, all of our jobs, frankly, a heck of a lot easier. And I’m glad for the decision.”