President Joe Biden delivers a speech on canceling student debt February 21, 2024 in Culver City, California.
Mario Tama | Getty Images News | Getty Images
A more targeted forgiveness program
This time, the Biden administration has scaled back aid by targeting specific groups of borrowers. He hopes the ruling will help the new plan survive legal challenges.
“I think it would be easier to justify to a court that is skeptical of broad authority,” said Luke Herrine, assistant professor of law at the University of Alabama, in a previous interview with CNBC.
Tens of millions of borrowers could still benefit if the program continues.
The plan would cancel the debt of borrowers who:
- Are already eligible for debt forgiveness under an existing government program, but have not yet applied
- Be in repayment for 20 years or more for undergraduate loans, or for more than 25 years for graduate loans
- Attended schools of dubious value
- You are experiencing financial difficulties
It’s not yet clear how financial hardship will be defined, but it could include those burdened by medical debt or high child care costs, the Biden administration said.
The new plan also calls for borrowers to get up to $20,000 in unpaid interest on their federal student debt canceled, regardless of their income.
For the critics, deja vu
For critics of widespread student loan forgiveness, Biden’s new plan looks a lot like the first.
After Biden touted his revised relief package, Missouri Attorney General Andrew Bailey, a Republican, written the that the president “shamelessly attempts to eclipse the Constitution.”
“See you in court,” Bailey wrote.
Missouri was one of six Republican-led states — along with Arkansas, Iowa, Kansas, Nebraska and South Carolina — that filed a lawsuit against the latest relief effort. Biden debt.
Red states argued that the president had overstepped his authority and that canceling the debt would hurt lenders’ bottom lines. The conservative judges agreed with them.
Once the Biden administration officially releases its new student loan forgiveness plan, more legal challenges will be inevitable, said higher education expert Mark Kantrowitz.
“Legal proceedings will likely follow within a few days,” Kantrowitz added.
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