President Joe Biden has unveiled new measures to address a recent Supreme Court decision and provide assistance to student loan borrowers.
During his remarks at the White House, Biden expressed his disagreement with the Supreme Court’s ruling on student loans and criticized Republicans for opposing relief for working and middle-class Americans.
Instead of relying on the 2003 Higher Education Relief Opportunities for Students Act (HEROES Act), Biden stated that he would base the plan on the 1965 Higher Education Act as a fallback option.
In the wake of the Supreme Court’s disappointing decision on student debt relief, the Biden-Harris Administration is taking action to support students and borrowers. pic.twitter.com/xWFmPOK9OB
— The White House (@WhiteHouse) July 3, 2023
When questioned about giving borrowers false hope, Biden shifted blame onto Republicans, accusing them of taking away the hope that was initially provided.
To avoid reneging on campaign promises and to support his re-election campaign, Biden outlined new repayment options and a broader relief plan aimed at assisting borrowers.
The proposed onramp repayment program, starting on October 1 after the Covid pandemic-induced pause, would provide a temporary 12-month period where borrowers can avoid default and credit damage if they are unable to make payments.
Biden emphasized that the Department of Education would not report missed payments to credit agencies during this period, recognizing the challenges borrowers may face as they transition back into repayment.
It’s worth noting that this program differs from the student loan pause initiated by former President Donald Trump in 2020, which Biden extended. Unlike the previous program, where interest did not accrue due to the absence of required monthly payments, the onramp repayment program aims to mitigate the risk of default.
Furthermore, Biden announced changes to the maximum percentage of discretionary income that undergraduate borrowers need to allocate towards their student debt. The cap would be reduced to 5% each month, down from the previous 10%.
Biden reiterated his commitment to providing student debt relief through the 1965 Higher Education Act, empowering Education Secretary Miguel Cardona to compromise, waive, or release loans under specific circumstances.
The Supreme Court rejected Biden’s argument that his student loan plan was legal under the HEROES Act, which allows relief in “national emergency” situations to prevent worsened financial positions for recipients of student loans.
Biden criticized the Supreme Court’s decision on student loans, stating that he believed it was wrong. He also condemned Republican opposition to relief measures for hardworking Americans while supporting relief for businesses during the pandemic.
During his time as a senator, Biden was involved in legislation that restricted bankruptcy proceedings for indebted students and eased income requirements for parents and students. Financial experts had warned of the consequences, leading to the current student loan crisis in America’s higher education system.