The U.S. Supreme Court, in a 6-3 vote on June 30, struck down President Joe Biden’s student loan forgiveness program, which would have forgiven up to $20,000 in federal student loans for those who qualified. The Court ruled that the Administration had no authority to unilaterally discharge over $400 billion in federal loans.
In response, the Administration announced three debt relief proposals: a new debt forgiveness plan relying on the authority of the Higher Education Act, an income-driven repayment plan and a one-year “on ramp” beginning Oct. 1 for borrowers to ease back into making monthly payments that have been suspended since March 2020. The new debt forgiveness plan also is expected to face legal challenges.
Meanwhile, several Senate and House Republicans on committees with jurisdiction on higher education issues had introduced student loan reform legislative packages in anticipation of the Supreme Court ruling. The Senate bill aims to address the issues driving the skyrocketing cost of higher education, while the House bill seeks to restructure and simplify the current income-driven repayment plan system. Neither package is likely to garner significant bipartisan support forcing each party to search for common ground on an issue that could play an important role in the 2024 elections.
