Biden announces new plan to forgive student loan debt for millions (2024)

Geoff Bennett:

President Biden announced new plans to cancel student debt for millions of borrowers.

Lisa Desjardins is here with more.

So, Lisa, this is President Biden's broadest attempt at student loan debt forgiveness since the U.S. Supreme Court struck down his previous effort more than a year ago. Is that right?

Lisa Desjardins:

That's right, Geoff.

The administration did not give final details of their plan today, but they did outline executive actions that they're teeing up. Those would eliminate at least $20,000 in accrued interest for those who owe more than their original loan, offer more for those with lower incomes, cancel remaining debt for anyone who has spent 20 or 25 years, depending on the loan, repaying their loans, and void loans from college programs that were proven to be deceptive.

Biden spoke about the move today.

Joe Biden , President of the United States: By freeing millions of Americans from this crushing debt of student debt, it means they can finally get on with their lives, instead of being put — their lives being put on hold.

Lisa Desjardins:

Danielle Douglas-Gabriel covers the economics of higher education for The Washington Post and joins me now.

Danielle, the White House says some 23 million Americans could be affected by this, and a financial boost for them. Help us understand, who exactly does the White House think this helps?

Danielle Douglas-Gabriel, The Washington Post:

Sure.

So, the vast majority of federal student loan borrowers could see some relief under this plan. And it's important to note there are many facets to the plan, five categories of borrowers in total, but perhaps the largest category that could deliver relief is the one that eliminates up to $20,000 in student loan interest from a borrower's balance.

This is pretty common that borrowers may have borrowed, say, $20,000, but, because of the way interest accrues on student loans, could owe twice as much over the lifetime of their loan. So, this proposal would really help those folks. And the White House is saying about 25 million people will benefit from that part.

But 23 million of that 25 could get their interest completely eliminated under this plan.

Lisa Desjardins:

As you indicate, this is a complex proposal.

And, in part, that's because of the Supreme Court's previous decisions, the Biden administration trying to put something together that they think can remain legally intact. But help us understand, with all that complexity, when could this actually go into place?

Danielle Douglas-Gabriel:

So what's interesting here is that most of us who have been watching this law — and keep in mind that the regulations started to be crafted right after the Supreme Court struck down Biden's last attempt at this large-scale debt relief.

But we thought, many of us, that the full regulation wouldn't be implemented until next summer. But the Biden administration has zeroed in on a couple elements that they could do earlier, most importantly, the interest reduction piece, which the administration says they could likely push out this fall ahead of the election.

Lisa Desjardins:

We talked about the benefits to many millions of Americans, but let's also talk about the costs. They too could be substantial.

Now, we know that the Biden administration has boasted that it canceled about $146 billion in loans. That's from previous programs that they implemented. Now, according to the Committee for a Responsible Federal Budget, when you add in the pauses in debt relief and other Biden programs that they have put in place, it's more like $600 billion, by their estimate, that has been spent so far in student debt relief.

And we don't know how much this new program will cost. Some, like Louisiana Republican Bill Cassidy, have repeatedly argued that this is a wealth transfer from those who have college degree — to those who have college degrees.

Sen. Bill Cassidy (R-LA):

Where is the forgiveness for the guy who didn't go to college, but is working to pay off the loan on the truck he takes to work? What about the woman who paid off her student loans, but either bought a less expensive home, but is now — or is now struggling to afford the mortgage that she has?

Is the administration providing them relief? No, nada. Of course not.

Lisa Desjardins:

Danielle, how does the administration respond to that idea that this wildly runs up the national debt to just give a temporary boost to a very select group of Americans?

Danielle Douglas-Gabriel:

You know, the administration has said in the past that the economic benefit of forgiving debt could be tenfold, right?

People are freed up from having to make those payments. They're more likely to return money to the economy in the forms of purchasing homes, purchasing cars, spending more in general. I mean, certainly, we did see some boost during the 3.5-year pause of federal student loans in terms of home purchases before interest rates really started to skyrocket.

And perhaps that certainly could be the case if we were to see broader debt relief. But, yes, the cost of these programs has been up for debate, as well as the utility, because it's not beneficial to all American taxpayers.

But I think it's important to note that the vast majority of people who have student loan debt have debt and no degrees. There are about 40 percent of people, actually. And so these are people who started but didn't finish, and they are dealing with this debt, most of whom are struggling with it, and see no way out.

So I think that's really what the president and his administration is trying to get at, trying to help those people who didn't really get to see the benefit of their education.

Lisa Desjardins:

This, of course, was part of a 2020 Biden election promise, but we are yet again in a presidential election year. And as you said, a big chunk of this, they hope to implement before the election.

Can you talk about the politics at play here for the voters that the Biden administration might be concerned about?

Danielle Douglas-Gabriel:

I mean, it's certainly not surprising that the administration is touting all of the president's accomplishments on student debt, cleaning up a lot of programs, existing forgiveness programs that weren't operating well and helping to deliver that $146 billion that you mentioned earlier.

And it's certainly not surprising that they are touting this particular plan. Many of us who cover this were hoping to see the final rule issued this week. The Department of Education said it's coming in — in the coming months, we will see something. And, of course, there will be public comment on that.

But I suspect — and I'm not a politics reporter, but I do suspect that as we near the election, you will see this administration continuing to highlight and uplift the work that they have done to help borrowers, particularly young borrowers, who are an important part of the coalition.

Lisa Desjardins:

Now let's talk about the future of this in the courts.

As soon as this rule comes out, do you think there could be an injunction against it filed immediately? Do you think that this is clear — clearly on strong legal grounds? What's going to happen?

Danielle Douglas-Gabriel:

I mean, certainly, it's on stronger legal grounds, from what experts are telling me, than the previous rule, because it's backed by a different authority.

The Higher Education Act, which governs pretty much all of higher ed in terms of financial aid and all of those things, is the anchor for this, whereas the other rule was based on a 9/11 kind of emergency power rule that the Supreme Court didn't really think met the smell test.

So, in this instance, I think it will be a little harder to see an immediate injunction because this went through a negotiated rulemaking process. The rule is going to come online next July, regardless of who's in office. There will likely be challenges. And it's certainly — if the Trump administration were to win, they could choose not to enforce the rule. They could also choose to try to rescind the rule.

So that is also a possibility to think about.

Lisa Desjardins:

Danielle Douglas-Gabriel, thank you so much for your reporting on this.

Danielle Douglas-Gabriel:

Thank you.