The Biden administration’s attempt to cancel student loans has been halted by the Supreme Court. This was a reckless and regressive policy that was unlawfully implemented. It was nothing more than a pre-election gift to college-educated voters and it’s good to see it come to an end. Additionally, Congress, including some Democrats, have formally opposed Biden’s actions through a resolution, which is a positive sign for our democratic institutions and the importance of the separation of powers.
However, we shouldn’t let our guard down when it comes to student loan forgiveness. While everyone has been focused on the cancellation efforts, the Department of Education (DOE) has been quietly working on an even more disastrous policy: a new Income-Driven Repayment (IDR) rule. The complexity of the federal student loan policy is undeniable, but we must recognize that Congress created programs to help struggling borrowers. These programs include Income Contingent Repayment and Income-Based Repayment options, which limit monthly payments based on income and offer forgiveness after a certain period of time.
The problem lies in the fact that Congress gave the DOE the power to establish criteria and repayment terms for these programs. In January, the DOE proposed a new rule that would significantly alter existing plans and create a new catch-all IDR plan. This new plan would reduce monthly payments for most borrowers, including potentially reducing payments to $0, and shorten the time to forgiveness to as little as 10 years. Essentially, it would have the same effect as the cancellation effort, but permanently and for future borrowers.
The cost of this new rule is staggering and estimates range from $138 billion to potentially as high as $1 trillion. The Penn Wharton Budget Model estimated that the program could cost between $333 billion and $361 billion over 10 years. This is a significant increase compared to the $500 billion price tag of the old cancellation policy. While the IDR rule may seem less harmful than cancellation, it is the result of Congress giving away its legislative power and allowing spending without proper appropriations.
It’s crucial that we focus on this issue and not overlook it in light of the Supreme Court’s decision. The rule is still a proposal, but a final rule is expected soon. Without judicial intervention, not only is the student loan system at risk, but the very structure of our Constitution is under attack. We need to be prepared for this critical fight over IDR and ensure that our constitutional principles are upheld.
Caleb Kruckenberg is an attorney at Pacific Legal Foundation, a nonprofit organization dedicated to defending Americans’ liberties from government overreach.
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