Education Department nixes plan to write off student loans

The U.S. Department of Education on Thursday is scheduled to formally post notices with the Federal Register about withdrawing its most recent plans to deliver so-called student loan forgiveness. The notices were first informally posted on Dec. 20, the same day that President Joe Biden announced student debt cancellation for an additional 55,000 public service workers. The White House claimed to provide student loan forgiveness to nearly 5 million people through various actions taken during the Biden administration.

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Why is the department withdrawing its plans? Chief among the reasons cited in the notices was what the department described as an inability to implement the proposed rules in the time before President Joe Biden leaves office. Instead, the Department of Education said it would focus its efforts on court-ordered settlements related to student loan debt and helping borrowers return to making payments.

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Didn’t the Supreme Court already swat this down? In June 2023, the high court struck down a previous Biden administration plan that would have forgiven up to $20,000 in debt per student, for many with federal loans. That plan would have amounted to an estimated total of $430 billion to be wiped out over a decade. It cited the Higher Education Relief Opportunities for Students Act of 2003, or HEROES Act, as its grounding authority. In a 6-3 ruling, the court said the White House didn’t have the power to cancel the debts with congressional approval, and Congress didn’t have the votes to approve it.

What were the Biden administration’s new proposed rule changes? Just 10 days after the court’s decision, the Biden administration attempted to cancel student loans under the administration’s so-called Saving on a Valuable Education, or SAVE, Plan. Missouri and six other states challenged that effort with a lawsuit in April.