US Supreme Court May Also Block Biden's "Plan B" on Student Loan Forgiveness, Expert Says

Since the Supreme Court struck down US President Joe Biden’s debt relief plan last summer, the administration has been working on delivering a new plan for student loan borrowers.

Biden first attempted to forgive loans through an executive order, but the court’s conservative majority in late June 2023 ruled the president had no authority to cancel student debt for millions of borrowers.

In the new proposal known as Biden’s “Plan B,” the administration has turned to the rulemaking process, Erudera.com reports.

However, potential hurdles are likely to happen, with the new proposal possibly facing the same legal challenges as the first student loan forgiveness plan.

Higher education expert Mark Kantrowitz says the Supreme Court may also block the proposals for plan B for broad student loan forgiveness.

“Some of the proposed definitions of financial hardship, such as borrowers whose debt exceeds the amount borrowed, may include as many as a third of borrowers, yielding the same issues that caused the first attempt at broad student loan forgiveness to be blocked,” Kantrowitz said in an interview with Erudera News.

The US Department announced on Wednesday that the Biden administration will automatically forgive $1.2 billion in student loans for over 150,000 student loan borrowers under the Saving on a Valuable Education (SAVE) repayment plan. To be eligible for relief, borrowers should have made payments for at least 10 years.

“For a borrower to be eligible for this forgiveness they must be enrolled in the SAVE Plan, have been making at least 10 years of payments, and have originally taken out $12,000 or less for college,” the Department explained.

It also said borrowers would receive emails notifying them they have been approved for debt relief and do not need to take any actions to receive it.

This brings the total amount of student debt forgiven by Biden to about $138 billion for nearly 3.9 million borrowers.

Kantrowitz projects that under Biden’s Plan B, student loans of as many as 10 million borrowers could be forgiven; however, the exact figure remains uncertain until the final rule is officially published.

In 2022, President Biden announced his student loan forgiveness plan, which would cancel up to $20,000 in federal student loans per borrower. That would relieve 43 million student loan borrowers earning less than $125,000 annually.

The plan did not proceed after facing at least six lawsuits from conservative groups. In a 6-3 decision, the Supreme Court rejected the administration’s student loan forgiveness program.