Is Biden's $39 billion student loan forgiveness action legal? 'Be assured it's going to stay,' says expert

cnbc.com:

The Biden administration Friday said it would forgive $39 billion of student debt for 804,000 borrowers, many of whom may be wondering if the action will meet the same doom as the forgiveness plan killed by the Supreme Court last month.

Student loan experts think this one is likely to survive.

«Undoubtedly you'll see some legal complaints,» said Mark Kantrowitz, a higher education expert. «But they won't go anywhere.»

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«I think anybody who gets this [forgiveness] can be assured it's going to stay,» he added.

The latest action isn't the same as the broad debt-cancellation plan originally sought by the White House, which Supreme Court justices struck down in a 6-3 decision on June 30. That action would have erased up to $20,000 of student debt for tens of millions of borrowers carrying federal loans. It had an estimated cost of $400 billion.

Friday's announcement concerns borrowers in income-driven repayment plans. There are four of these plans, which aim to make loan payments more affordable for lower earners.

IDR plans cap monthly payments, generally at 10% or 20% of a household's discretionary income, depending on the plan. The U.S. Department of Education is trying to enact a new plan with a 5% cap.

Importantly, borrowers who make regular payments — generally for 20 or 25 years — get their remaining loan balances erased at that time.

However, the Biden administration said that forgiveness hasn't occurred in many cases — even though borrowers had earned it — due to administrative errors.

Beneficiaries of the