President Joe Biden announced a new plan to cancel student debt Friday after the Supreme Court struck down his $400 billion student loan forgiveness program.
The new plan will be grounded in the Higher Education Act, which will allow the secretary of education to “compromise waive or release loans under certain circumstances,” the president said in his remarks.
“This new path is legally sound. It’s going to take longer, but in my view it’s the best path that remains for providing for as many borrowers as possible,” he added, noting he ordered his team to move “as quickly as possible.”
The administration is also creating a “temporary 12-month on-ramp repayment program,” where monthly payments for loans will be due, but if borrowers fail to pay, it prevents them from default or harming their credit, Biden said.
Beyond the on-ramp, the administration finalized the Saving on a Valuable Education (SAVE) plan, which, for undergraduate students, will “cut in half the amount that borrowers have to pay each month from 10% to 5% of discretionary income,” the White House said in a statement.
“We’ll use every tool in our disposal to get you the student debt relief,” Biden added, arguing “the court misinterpreted the constitution.”
The Supreme Court waited until the last day of its ruling calendar to announce the 6-3 decision on Biden’s student loan forgiveness program, dealing a blow to one of the president’s key initiatives. The program would have given up to $20,000 to certain borrowers making less than $125,000 a year.
Supporters of student debt forgiveness demonstrate outside the US Supreme Court on June 30, 2023, in Washington, DC. (OLIVIER DOULIERY / AFP) (Photo by OLIVIER DOULIERY/AFP via Getty Images)
Biden had argued he had executive authority to cancel loans for 40 million Americans due to the national emergency resulting from the COVID-19 pandemic, via the use of the HEROES Act. (RELATED: Supreme Court Blocks Biden’s Student Loan Giveaway)
“[T]he HEROES Act provides no authorization for the Secretary’s plan even when examined using the ordinary tools of statutory interpretation—let alone ‘clear congressional authorization’ for such a program,” the court’s opinion reads.
Unthinkable.
This fight isn’t over. I’ll have more to announce when I address the nation this afternoon. https://t.co/wGBuwBySB7
— President Biden (@POTUS) June 30, 2023
The president blamed Republican elected officials for bringing the legal case against his plan, and said Republicans “snatched away the hope” from student borrowers.
“The hypocrisy of Republican elected officials is stunning. They had no problem with billions in pandemic-related loans to businesses – including hundreds of thousands and in some cases millions of dollars for their own businesses. And those loans were forgiven. But when it came to providing relief to millions of hard-working Americans, they did everything in their power to stop it,” Biden said in a statement. “I believe that the Court’s decision to strike down our student debt relief plan is wrong.”
He also signed a veteran student loan bill almost immediately after the court’s decision.
The president signed the Changing Age-Determined Eligibility to Student Incentive Payments Act (CADETS Act), expanding the maximum age for those in the Student Incentive Payment Program (SIPP). The program provides academic financial support to those who attend one of six state maritime academies.
Specifically, “the bill modifies the age requirements to allow older cadets to qualify for the program if they will meet the age requirements for enlistment or commission in the Navy Reserve at the time of their graduation. Current age requirements prohibit cadets older than 25 from participating in the program,” the bill’s summary reads.
Biden praised the bipartisan nature of the bill, saying, “Thank you to Senator Gary Peters and Representative Jack Bergman, as well as Senators Todd Young, Amy Klobuchar, Tammy Baldwin, Ted Cruz, and Mike Braun, for their leadership.”