President Joe Biden announced on Friday that his administration would cancel student loan debt for hundreds of thousands of borrowers, but the controversial move is an adaptation of a policy first-introduced and signed into law under former Republican President George W. Bush.
The new loan forgiveness will add up to a total of $39 billion in relief as it benefits 804,000 borrowers who have making payments through Income-Driven Repayment (IDR) program. Providing relief will depend on what type of loans as well as when a student loan was borrowed. Borrowers on income-based repayment plans are entitled to have their debt forgiven after 20 or 25 years of payments.
The Biden administration's announcement on Friday came weeks after his administration's promise to forgive up to $20,000 of debt for millions of student borrowers was rejected by the Supreme Court in June. The top court's justices ruled 6-3 that Biden didn't have the executive authority to decide to forgive the large amount of debt without prior approval from Congress.
"When the Supreme Court made the wrong decision, I immediately announced a new plan to open an alternative path to relief for as many borrowers as possible, as soon as possible," Biden said on Friday. Biden's initial loan relief plan aimed to forgive up to $10,000 for borrowers making less than $125,000 ($250,000 for couples filing jointly), and up to $20,000 for Pell Grant recipients.
Meanwhile, the IDR plans allows student loan borrowers to repay their debts without facing a major financial challenge each month. The IDR program, which has four types of repayment options, sets monthly payments based on a person's income and family size.
Biden's recent move to ease the burden of loan repayment was a buildup on efforts carried out by former administrations. Congress passed the bipartisan College Cost Reduction and Access Act in 2007 when Bush was president. The legislation's purpose was to make student loan debt repayment easier for borrowers. The plan included modifying existing programs and creating new ones that serve this purpose.
The bill passed during the Bush administration provided more money to low-income families seeking to pay their college tuition, reduced interest rate on future federal Stafford Loans, and expanded Pell Grants. The IDR and the Public Service Loan Forgiveness (PSLF) were two programs created under the 2007 legislation to help borrowers.
Nonetheless, Biden's use of the IDR plan to wipe out student loan debt worth billions of dollars angered some GOP members critical of the president. Representative Lisa McClain, a Republican, described the plan as "unconstitutional" and as a "slap in the face to hard-working taxpayers that have dutifully paid off their student loans."
"Rest assured, come hell or high water, I will fight this blatant overreach until the end," McClain tweeted.
North Carolina Republican congresswoman Virginia Foxx, the chairwoman of the House Education and the Workforce Committee, said in a statement: "The Biden administration's blatantly political attempt to circumvent the Supreme Court is shameful. The Biden administration is trampling the rule of law, hurting borrowers, and abusing taxpayers to chase headlines."
Foxx continued: "Biden's student loan scam is far from over. From day one, this administration has encouraged borrowers not to repay their loans and has expected taxpayers to foot the bill. Today's celebration of counting no payments as payments is just the latest example of the ongoing delusion at the White House."
The Bush-era legislation allowed student borrowers to cap loan payments at 15 percent of income and offered to forgive loans after 25 years of repayment. That policy was then enhanced by the Obama administration, which announced that student borrowers were allowed to pay 10 percent of their income for loan repayment, and loan forgiveness could be granted after 20 years of repayment, according to The Washington Post.
Meanwhile, the Biden administration's move announced on Friday would fix the IDR plan to ensure that borrowers have an accurate count of the number of monthly payments that qualify for debt relief. "For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness," Secretary of Education Miguel Cardona said in a statement.
Cardona continued: "Today, the Biden-Harris Administration is taking another historic step to right these wrongs and announcing $39 billion in debt relief for another 804,000 borrowers. By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve, just as we have done for public servants, students who were cheated by their colleges, and borrowers with permanent disabilities, including veterans. This Administration will not stop fighting to level the playing field in higher education."
Newsweek reached out by email to student loan expert Heather Jarvis, who practiced public interest law and previously contributed to student debt relief policy for the House Education Committee, for comment.
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Fatma Khaled is a Newsweek weekend reporter based in New York City. Her focus is reporting on U.S. politics, world ... Read more
