Biden Has a Plan B for Student-Loan Forgiveness. The Courts Could Kill It, Too.
WASHINGTON—President Biden says he hasn’t given up on large-scale student-loan forgiveness. But the administration’s latest debt cancellation plan is far from a sure thing. The Education Department this summer began an arcane regulatory process that officials hope eventually will offer millions of Americans a chance to erase part or all of their federal student-loan debt.
The administration was forced to start from scratch after the Supreme Court ruled in June that the executive branch had exceeded its authority when it put in place a $430 billion plan to wipe away up to $20,000 in student debt for Americans making less than $125,000 a year. The new debt forgiveness plan, which relies on a different legal authority, is likely to face similar legal challenges to the ones that killed the original effort. Unknown is exactly how many borrowers would be eligible for the program and what kind of relief they might receive.
The program might not be up and running before the 2024 election, and even if it is, legal challenges and possible injunctions could prevent it from being implemented. A Republican president likely would stop the effort in its tracks. The lingering questions are adding to the uncertainty hanging over the roughly 40 million Americans with federal student loans as they prepare to resume loan payments next month for the first time in more than three years.
The Education Department instituted a pause on the payments in March 2020 in response to the spread of Covid-19. “It makes it hard to make long-term decisions and plans. It makes it difficult to think about the future,’ said Lina-Maria Murillo, 42 years old, an assistant professor at the University of Iowa with roughly $150,000 in federal student loans.
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