The absence of legal framework behind Biden’s student loan bailout strategies

President Biden is challenging the Supreme Court’s decision that struck down his $430 billion student loan bailout. He is pursuing various workarounds for college debt cancellation that may violate the spirit of the court’s ruling on executive overreach.

Recent news reports suggest that Biden’s lawlessness extends beyond this particular case. However, his actions should come as no surprise, as he previously hinted that he would not let the separation of powers impede his efforts to provide debt relief to borrowers.

“I believe the court’s decision to strike down my student debt relief program was a mistake, was wrong,” Biden stated on the day of the ruling. “I’m not going to stop fighting to deliver borrowers what they need.”

Activists participate in a rally at the U.S. Supreme Court on June 30, 2023, in Washington, D.C.
(Kevin Dietsch/Getty Images)

Biden is pursuing two alternatives to the student loan bailout and implementing a grace period for borrowers who are resuming payments after a pandemic-induced break. These actions may conflict with the decisions of both the Supreme Court and Congress.

In July, Biden announced that nearly one million borrowers would have $39 billion of student debt forgiven through a new calculation for income-driven repayment plans. This calculation allows borrowers to include the forbearance or deferment period in their repayment period, leading to higher debt forgiveness.

Biden is also expanding the income-driven repayment program itself. Under his proposed SAVE plan, borrowers with incomes below 225% of the federal poverty line will have zero-dollar monthly payments and may have their loans forgiven in just 10 years.

Despite some differences, this new plan closely resembles the student loan bailout program that the Supreme Court invalidated. According to the University of Pennsylvania, the SAVE program could cost a staggering $475 billion, even more than Biden’s original plan. Additionally, high-earning borrowers only need to make minimal monthly payments before their remaining balances are forgiven.

It is worth noting that Biden’s actions go against the wishes of Congress, which has failed to pass any student debt relief legislation. Despite the requirement for student loan payments to resume in September, Biden has introduced a one-year repayment grace period that does not count missed payments against borrowers’ credit scores.

Biden’s student loan forgiveness measures not only exceed his executive authority but also fail to address the root cause of the college debt crisis: unaccountable colleges that excessively charge students. By shifting the burden of college debt to taxpayers, Biden allows colleges to continue raising tuition without consequence.

A recent report from the Wall Street Journal reveals how colleges have been engaging in lavish spending and passing the costs onto students through exorbitant tuition hikes. To effectively resolve the debt crisis, colleges must be held accountable for their role in driving up costs.

Lastly, Biden plans to announce another broad debt forgiveness plan in the near future. Regardless of the plan’s specifics, it is likely to be viewed as executive overreach, violating both the Supreme Court’s ruling and the will of Congress. This disregard for established institutions threatens the foundations of American governance.