Biden has a Plan B for student loan forgiveness after SCOTUS blocked his original program

In a speech from the White House, Biden said his administration will take another stab at student loan forgiveness, this time grounding the approach in a different law, the Higher Education Act. Biden’s original plan used the HEROES Act as its legal basis, which the court struck down. The Supreme Court majority said the HEROES Act does not give the Biden administration the authority to modify payments to such a large extent, and that it’s instead up to Congress.

Biden says his Plan B will allow U.S. Secretary of Education Miguel Cardona to initiate “a rulemaking process aimed at opening an alternative path to debt relief.”

The president also announced a 12-month “on ramp” to repayment once federal student loan repayments start up again in October. While interest will still accrue on debt, the president said during the 12-month period, from October 1, 2023 to September 30, 2024, the “threat of default or having your credit harmed” for missing payments will be removed. Borrowers who miss payments will not be considered delinquent, reported to credit bureaus, placed in default, or have their debts sent to collections.

“This is not the same as the student loan pause,” he said. As part of the debt ceiling deal reached earlier this year, the president was not able to extend the federal student loan payment pause that has been in place since the start of the COVID-19 pandemic. The president noted that those who can afford to make their payments during this time should do so, especially so their balances don’t balloon due to interest.

The president also highlighted the new income-driven repayment (IDR) plan that his administration plans to implement soon. It could lower monthly payments for millions of borrowers.

Other Democratic lawmakers, including New York rep. Alexandria Ocasio-Cortez, encouraged the president to use the Higher Education Act’s authority to implement cancelation.

It is very important to note this SCOTUS ruling does NOT remove Biden’s ability to pursue student loan forgiveness.

The Biden Admin can use the HEA (Higher Ed Act) – our position from the start – to continue loan forgiveness before payments resume. They should do so ASAP. https://t.co/inV3yWsDwB

— Alexandria Ocasio-Cortez (@AOC) June 30, 2023

It was not immediately clear exactly what the new plan would look like or entail. The president indicated it could take “a while” for forgiveness to be implemented under a new approach.