Biden swings at student debt cancelation a third time

The Biden administration has unveiled a new plan to pursue the president’s long-touted goal to “cancel” student debt for the millions of Americans who once promised to repay the loans.

“Last June, in the wake of the Supreme Court’s decision blocking the Biden-Harris Administration’s original student debt relief plan, President Biden vowed to keep fighting to deliver student debt relief to borrowers…” reads a White House statement announcing the new plan.

Under the plan, Biden seeks to cancel up to $20,000 of a student loan borrower’s unpaid interest, regardless of income, while low and middle-income borrowers would be eligible to have all their unpaid interest canceled. The proposed plan would also automatically cancel student debt for individuals who currently qualify for existing debt forgiveness opportunities but have not applied.

But some economists and policy experts say the plan sends the wrong message to higher education institutions that continue to raise tuition.

“As the President himself suggested just a few years ago, such broad forgiveness is simply bad policy,” wrote Beth Akers, senior fellow on the economics of higher education with the American Enterprise Institute. “Not only is it regressive; it also provides colleges and universities with precisely the wrong incentives.

“When students don’t have to pay back the money they borrow to pay for college, colleges don’t have any reason to keep prices low. On the contrary, some students will necessarily benefit from paying and borrowing as much as possible.”

Republican lawmakers have taken major issue with the Biden administration’s prior attempts at initiating widespread student loan debt cancelation. On Tuesday, seven Republican-led states also filed a lawsuit against the administration’s SAVE Plan, which caps monthly student loan payments for qualified borrowers to a low amount and eliminates all remaining debt after as few as 10 years. 

The Biden administration has also faced enormous legal difficulties in executing student loan cancelation.  

In June 2023, the Supreme Court struck down the administration’s initial forgiveness program, which was set to cost taxpayers roughly $400 billion. 

The Court ruled the administration was overstepping its authority – a sentiment that President Biden himself has previously expressed, saying in 2021, “I don’t think I have the authority” to cancel debt.