Following the Supreme Court’s 6-3 decision to strike down the President's student loan debt forgiveness program, the Biden administration pledged to seek alternative ways to help borrowers, reports Yahoo.
“While today’s decision is disappointing, we should not lose sight of the progress we’ve made—making historic increases to Pell Grants; forgiving loans for teachers, firefighters, and others in public service; and creating a new debt repayment plan, so no one with an undergraduate loan has to pay more than 5% of their discretionary income,” President Joe Biden said.
The administration announced it had finalized the “most affordable repayment plan ever created, ensuring that borrowers will be able to take advantage of this plan this summer—before loan payments are due.”
Called the Saving on a Valuable Education (SAVE) Plan, the student loadn debt repayment plan will cut monthly payments to $0 for millions of borrowers who earn $32,800 or less ($67,500 for a family of four) and “save all other borrowers at least $1,000 per year,” per the Education Department. The SAVE plan will replace the existing Revised Pay-As-You-Earn (REPAYE) plan, with benefits slated to go into effect in July 2024.
The Biden administration also announced the formation of a 12-month “on-ramp” to repayment, to begin from October 1, 2023, to September 30, 2024, “so that financially vulnerable borrowers who miss monthly payments during this period are not considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies.”
“We started the process to provide relief to as many people as we can, as fast as we can, through rule making. Under the law, this path will take time, but we are determined to keep fighting for borrowers, and we will keep you updated in the months ahead,” Secretary of Education Miguel Cardona stated.
“The Biden Administration does not have the authority to unilaterally ‘forgive’ student loan debt across the board, and attempting to do so is nothing more than a political maneuver,” said Rep. Jeff Duncan (R-SC). “This exploits the original intention of the HEROES Act of 2003, oversteps the authority of Congress, undermines the will of the American people, and would send the country further into a debt spiral. The Court should invalidate the Secretary of Education’s sweeping student loan forgiveness program since it trespasses on Congressional authority and violates the separation of powers.”
Out of all borrowers, Black Americans are the most in need of student-debt relief. According to the Education Data Initiative, Black college graduates owe an average of $25,000 more in student loan debt than white college graduates. Four years after graduation, Black students owe an average of 188% more than white students.