Washington – President Biden has laid out the steps his administration plans to take after the Supreme Court struck his student loan relief package in a 6-3 decision that overturned a key campaign promise, pledging to continue pursuing debt cancellation through “a new course” that is “legally sound.”
The president insisted he “didn’t give borrowers false hope” with his now-undone plan, which would have forgiven up to $20,000 in federal student loan debt. Instead, the president said the court “misinterpreted the Constitution” and blamed Republicans for continuing the program and for having vote against in Congress.
“What I did, I thought was appropriate, could be done, and will be done,” the president told reporters after remarks at the White House. “I didn’t give borrowers false hope, but Republicans ripped off the hope they were given.”
It was the second time in as many days that the president had been forced to react to a defeat handed down by the high court. THURSDAY, the judges ruled that the race-conscious affirmative action admissions policies of Harvard College and the University of North Carolina are unconstitutional.
But this time, the court ruled against a policy that Mr. Biden himself promised and unilaterally carried out. Last August, President and Secretary of Education Miguel Cardona announced that the administration would forgive $10,000 in student loans for those earning less than $125,000 a year, and an additional $10,000 in student loans for those who attended college on Pell Grants. The promise of reparations was immediately challenged in court, before ending up in the Supreme Court, where it was overturned on Friday.
Speaking from the White House on Friday afternoon, the president told borrowers he was not backing down.
“Today’s ruling closed a doorway,” Biden said. “Now we will pursue another one. I will never stop fighting for you. We will use every tool at our disposal to get you the student debt relief you need to achieve your dreams.”
The president announced that he had directed Education Secretary Miguel Cardona to begin a process under a law known as the Higher Education Act to forgive loans that were “compromised, waived or canceled loans in certain circumstances”. The administration is also rolling out a 12-month “ramp repayment program” when student loan repayments resume in the fall after being halted during the pandemic. Starting Oct. 1 and for one year, the Department of Education will not refer borrowers who miss payments to credit reporting agencies or consider them delinquents, the White House said.
“I am announcing today a new path consistent with today’s decision to provide student debt relief to as many borrowers as possible as quickly as possible. We will base this new approach on a different law of my original plan, the so-called Higher Education Take Action,” Biden said. “This new path is legally sound. It’s going to take longer, but in my view, it’s the best avenue left to provide debt relief to as many borrowers as possible.”
Additionally, Mr. Biden announced a new income-based repayment plan for federal loans, dubbed the “Saving on a Worthwhile Education” or SAVE plan. Under the program, monthly payments for undergraduate loans are capped at 5% of income, halved from their current level of 10%. It also shortened the time it takes to write off loans under $12,000 to 10 years of payments instead of 20 years, according to the White House.
“I know there are millions of Americans, millions of Americans in this country who feel disappointed and discouraged or even a little angry about today’s court ruling on student debt,” said President Friday. “And I have to admit that I do too.”
The White House said nearly 90% of the relief from the now-rejected plan would have gone to borrowers earning less than $75,000 a year, and nothing would have gone to those earning more than $125,000. It would have cost around $430 billion.
The court’s decision, which followed ideological lines, presented not only a setback for student loan holders, but also for Mr Biden’s re-election efforts. In 2020, he campaigned for the cancellation of student loan debt, which he ultimately could not honor.
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