Los 40 USA
Sign in to commentAPP
spainSPAINchileCHILEcolombiaCOLOMBIAusaUSAmexicoMEXICOlatin usaLATIN USAamericaAMERICA

FINANCIAL NEWS

What alternatives does Biden have if the Supreme Court strikes down his student loan relief plan?

The President’s long-awaited Student Loan Forgiveness initiative has come up against numerous legal challenges from GOP-led states.

What next if the Supreme Court blocks student loan relief?
ELIZABETH FRANTZREUTERS

During his successful 2020 presidential campaign, Joe Biden pledged to enact widespread student loan relief if he won election. But since becoming president he has struggled to secure the sort of student loan forgiveness that he had promised.

Last summer he passed an executive order providing funding for Student Loan Forgiveness, a new program that would reduce borrowers’ outstanding debt by up to $20,000 per person. However after a number of legal challenges the case ended up in the Supreme Court, which is expected to rule on the matter in June.

The administration has insisted that the legal doubts about the program are unfounded, but Biden has admitted that the Supreme Court verdict hangs in the balance. He told reporters recently: “I’m confident we’re on the right side of the law. I’m not confident about the outcome of the decision yet.”

Will Biden look to pass a new student loan relief program?

Should the Supreme Court rule that Biden overstepped his authority in passing widespread debt forgiveness without the approval of Congress, he faces a tough choice on how to proceed.

Biden is eager to provide some form of debt relief for student loan borrowers and may look to pass another executive order using an historic precedent. The Higher Education Act (HEA) of 1965 allows the Department of Education to cancel student loan debt in some instances.

This possibility has been raised by Senate Majority Leader Chuck Schumer and Sen. Elizabeth Warren, who issued a statement forwarding this as a solution.

Congress has already granted the Secretary of Education the legal authority to broadly cancel student debt under section 432(a) of the Higher Education Act of 1965 (20 U.S.C. 1082(a)), which gives the Secretary the authority to modify, ‘… compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption,’” they wrote.

Could a student loan relief bill pass Congress?

During the first two years of his presidency, Biden managed to pass some significant legislation to help the United States through a period of pandemic-induced economic turmoil. The $1.9 trillion coronavirus stimulus package was narrowly passed, but it required the slim Democratic majorities in both the House and the Senate to stay united to do so.

Now, the Republicans have retaken the House and it appears very unlikely that student loan forgiveness could secure the necessary votes to pass. However if the program, or something like it, were included in a larger package of legislation that was more likely to appeal to Republicans in the House, it is possible that Biden may consider going back to Congress.

Rep. Robert Garcia, a Democrat from California, said that the White House may attempt to pass debt relief in Congress if the Supreme Court strikes down the program.

“Well, I think there’s going to be an uproar across the country [if Student Loan Forgiveness is blocked], in particular on college campuses across the country. And folks who are working really hard to get it done, these activists are gonna continue to organize and we’ll continue to try to address the issue in Congress,” he said.