Biden Unveils $39 Billion Student-Loan Forgiveness Scheme Covering 800,000 Borrowers Days After SC Struck Down His $430 Billion Cancellation Plan

The Biden administration unveiled a $39 billion plan to write off student loans for over 800,000 borrowers days after the U.S Supreme Court struck down his original $430 billion cancellation plan.

Student loan borrowers on income-driven repayment plans who have made 20 or 25 years of payments will get their remaining balances wiped out in coming weeks, the Education Department said. 

“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” Education Secretary Miguel Cardona said in a statement.

The Education Department also plans to slash payments to 5% of discretionary income, which would be redefined to exclude more earnings.  Balances for borrowers who originally took out loans of $12,000 or less will also be forgiven after 10 years, instead of at least 20.

The Biden administration also claimed credit for approving $116.6 billion in loan forgiveness to date, including $45 billion through “improvements” to public-service loan plans.

In a 6-3 decision led by Chief Justice John Roberts, the court's conservative majority determined that the administration did not have the power to cancel $430 billion of student loan principal.

The Supreme Court's ruling against the student loan relief program was viewed as a setback for Biden's economic policy, as the program aimed to forgive up to $10,000 in debt for eligible individuals.

Despite the setback, the Biden administration vowed to explore alternative avenues for providing student debt relief under the Higher Education Act.

Biden criticised the Supreme Court's decision, calling it "wrong" and asserting that it misinterpreted the constitution.