By Andrew Gillen, CATO Institute
Mass student loan forgiveness is terrible policy (see this report for a comprehensive list of reasons), but that hasn’t stopped the Biden administration from trying to forge ahead. While the Supreme Court overturned the administration’s student loan forgiveness plan, every few weeks the administration announces another batch of loans that have been forgiven. The administration recently celebrated that, since taking office, it has succeeded in forgiving $180 billion of student loans for 4.8 million borrowers by transferring the financial burden from the students who took out the loans to taxpayers who did not. And they aren’t going to stop—the administration’s spokeswoman declared, “President Biden has vowed to use every tool available to cancel student debt for as many borrowers as possible, as quickly as possible.” Biden himself stated, “I will never stop working to cancel student debt— no matter how many times Republican elected officials try to stop us.”
But if student loan forgiveness lost in the Supreme Court, how are so many student loans still being forgiven? The answer is that there isn’t a student loan forgiveness plan. There are many plans, some of which are already up and running. Previous laws had already left numerous methods to forgive student loans, and many of those laws may give the Secretary of Education the ability to expand those programs.
The administration is also claiming that existing law gives it the authority to create new ways to forgive student loans. So the student loans the Biden administration already has or wants to forgive are a combination of existing programs, existing programs the Biden administration has expanded, and new programs the administration is seeking to implement.
Here’s a rundown of the administration’s student loan forgiveness plans and actions, which I’ll update monthly.
HEROES (new plan, overturned in court)
This was the big plan that got a lot of attention in 2022 and 2023. The plan was to forgive $10,000 for borrowers making less than $125,000, and $20,000 for borrowers who received a Pell Grant, at a total cost of $469 billion to $519 billion. The alleged authority for the plan was the 2003 HEROES Act. While designed to alleviate loan-related hardships for soldiers and reservists serving in Iraq and Afghanistan, the law also covered national emergencies, and the Biden administration argued the COVID-19 emergency gave it the authority to forgive virtually everyone’s loans.
Most observers were skeptical of this supposed authority, but it was not clear who had standing to sue (standing is the requirement that those filing the suit have a concrete injury from the policy). The companies that service student loans would be the most obvious injured party. But there was a perception that the Biden administration would...(READ THIS FULL ARTICLE, FREE, HERE).
