Wealth Management

Biden administration moves ahead with new plan to cancel student debt

U.S. President Joe Biden delivers remarks at Prince George’s Community College on September 14, 2023 in Largo, Maryland.
Kevin Dietsch | Getty Images

The Biden administration announced on Friday the next step in its new plan to cancel people’s student debt after the Supreme Court struck down its original policy in June.

The U.S. Department of Education released its initial agenda of policy considerations for its second attempt at delivering Americans student loan relief. It also shared a list of individuals who will serve on the “Student Loan Debt Relief Committee,” including Wisdom Cole at the NAACP, Kyra Taylor at the National Consumer Law Center and several student loan borrowers.

The Biden administration will focus on certain groups of borrowers in its new plan, including those suffering from financial hardship or who entered in repayment decades ago. Its original plan was broader, only cutting out student loan borrowers who earned more than $125,000 as individuals or $250,000 as couples.

“The Biden-Harris Administration has taken unprecedented action to fix the broken student loan system and deliver record amounts of student debt relief,” U.S. Secretary of Education Miguel Cardona said in a statement. “Now, we are diligently moving through the regulatory process to advance debt relief for even more borrowers.”

More from Personal Finance:
60% of Americans are still living paycheck to paycheck
Today’s graduates make less than their parents
Buy holiday airfare in October

The announcement comes days before the pandemic-era pause on federal student loan bills expires. Tens of millions of Americans have taken advantage of that relief, which has spanned three years and two presidencies.

The Biden administration had hoped to ease the transition back into repayment by forgiving up to $20,000 in student debt for tens of millions of Americans. But shortly after President Joe Biden rolled out his plan in August 2022, conservative groups and Republican states sued to block the relief.

The Supreme Court struck down the policy in June, concluding the president didn’t have the power to cancel up to $400 billion in consumer debt without prior authorization from Congress.

Legal experts expected the president to narrow his relief this round, in the hopes of increasing its chances of survival.

“That would be easier to justify in front of a court that is skeptical of broad authority,” Luke Herrine, assistant professor of law at the University of Alabama, told CNBC in a previous interview.

Unlike Biden’s first attempt to forgive student debt quickly through an executive order, this time he’s turned to the lengthy rulemaking process. As a result, borrowers might not see the relief before July 2025, according to higher education expert Mark Kantrowitz.

“But the Department of Education might try implementing it sooner, perhaps around the time of the election,” Kantrowitz said.

Articles You May Like

Cathie Wood’s Innovation ETF is up 31% in November, notching its best month ever
Pension-eligible workers face complex Social Security rules that may reduce benefits. How to more accurately estimate retirement income
Top Wall Street analysts expect these dividend stocks to enhance total returns
Virgin Galactic shares plunge in premarket after Branson rules out further investment
Should You Tell Your Beneficiaries What They Will Inherit: 10 Estate Planning Tips

Leave a Reply

Your email address will not be published. Required fields are marked *