President Biden Reveals His ‘Plan B’ for Student Loan Forgiveness

The Supreme Court ruled President Joe Biden’s student loan forgiveness program unconstitutional Friday, June 30. But that’s okay. Never one to let a little thing like the US Supreme Court get in his way, Biden revealed his plan B not long after the Judiciary shut down plan A. Will it work? Is it constitutional – or yet another overreach to get his way and save face after failing to deliver on a critical campaign promise with the next election right around the corner?

What Do Supreme Court Justices Know, Anyway?

Who needs the legal experts over at the Supreme Court when you have Joe Biden in the White House? From the man who gave us such sage advice as firing both barrels of a double barrel shotgun into the air to scare away would-be burglars comes some expert legal knowledge on the Supreme Court, the Constitution, and US law in general.

The Court’s ruling in Biden v. Nebraska shut down a program that might have forgiven or, at the very least, significantly reduced the debt of an estimated 40 million borrowers who are on the hook for a combined $430 billion. The president’s plan relied on the HEROES Act, passed in the wake of the September 11 terrorist attacks to give the Secretary of Education the authority to give certain student debt holders – like soldiers, first responders, and other emergency workers – a break when the nation suffers an emergency.

Biden called the Supreme Court’s student loan ruling a mistake and said the justices misinterpreted the Constitution. Chief Justice John Roberts, however, wrote to correct what might be a common misconception – on the left, at least – that loan forgiveness falls under the authority of the executive. At the top of page 23 in the Biden v. Nebraska opinion, Roberts throws the words of former Speaker of the House Nancy Pelosi (D-CA) back at the Democrats. “People think that the President of the United States has the power for debt forgiveness,” Roberts writes, quoting Pelosi. “He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”

Plan B for Student Loan Forgiveness – But What About Election Day?

So, the HEROES Act didn’t work out. The president says he’ll turn to the Higher Education Act of 1965 to pickup where his original plan failed. Student loan repayment will resume – after a three-year pause for the pandemic – on October 1. Once that happens, under Biden’s new plan, borrowers will be able to enroll in a 12-month “onramp repayment program” that removes the risk of default.

“During this period, if you can pay your monthly bills, you should,” the president said. “But if you cannot, if you miss payments, this onramp will temporarily remove the threat of default or having your credit harmed, which can hurt borrowers for years to come.” The new program also means borrowers don’t have to pay more than 5% of their “discretionary income,” which is calculated state-by-state based on their poverty guidelines and family size. The previous cap was 10%.

The administration hopes to use the older law to “compromise, waive or release loans under certain circumstances” for as many debt holders as possible. Indeed, many progressive groups and some legal scholars say he should have relied on the Higher Education Act to begin with. We’ve seen this law in action before; it’s the legal engine behind Public Service Loan Forgiveness and income-driven repayment programs, which allow eligible borrowers to make fixed payments for a predetermined number of years then have the rest of their debt forgiven.

Advocates for debt cancelation argue that the Higher Education Act makes erasing student loans legal, but it’s unclear as of yet just what that will look like. Some, however, fear that the ruling in Biden v. Nebraska sets any future presidential program for student loan forgiveness up for failure, regardless of the law used to justify it.

For now, one of Biden’s major campaign promises is dead in the water. Ever the political animal, though, the president was quick to turn it around on his ideological enemies. “I didn’t give any false hope,” he said when asked by reporters if he had failed to deliver on his promise. “Republicans snatched away the hope that was given.” But who will voters blame come Election Day?