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The U.S. Education Department also moved Friday to rescind a proposed regulation that would have clarified the rights of transgender athletes.
GOP-led states block Biden’s latest student debt relief plan
Touted the most affordable student loan repayment plan ever, the SAVE plan would have provided debt relief to over 30 million Americans.
The Biden administration indicated Friday it plans to scrap his latest student loan forgiveness proposals, which could have wiped away debts for tens of millions of Americans and cleared new paths to relief for borrowers in dire financial straits.
The rationale? The U.S. Education Department has limited time and resources, and its leader would rather dedicate them to helping at-risk borrowers repay their loans. The plans would also likely face more legal challenges and be abandoned once President-elect Donald Trump takes office.
In official notices set to be published the day after Christmas, U.S. Education Secretary Miguel Cardona acknowledged the “uncertainty around the implementation” of the proposals.
“The Department at this time intends to commit its limited operational resources to helping at-risk borrowers return to repayment successfully,” Cardona wrote.
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The move amounts to a death knell for one of President Joe Biden’s biggest initiatives to help Americans whose lives have been hampered by crushing student debt. Some advocates for borrowers said they were not surprised by the decision, which they viewed as another missed opportunity to fix a mounting crisis. Conservative critics characterized the administration’s reversal as a recognition that the plans never had a chance.
“The Biden-Harris administration’s student loan schemes were always a lie,” Sen. Bill Cassidy, a Louisiana Republican, said in a statement Friday. “With today’s latest withdrawal, they are admitting these schemes were nothing more than a dishonest attempt to buy votes by transferring debt onto taxpayers who never went to college or worked to pay off their loans.”
On the campaign trail, Trump pledged to dismantle the Education Department entirely. As January approaches, officials at the agency are scrambling to safeguard policies they see as essential to Biden’s legacy. Their decision to axe the proposed student loan relief regulations reflects some of the hard choices they’re confronting with limited time. While Biden managed to forgive roughly $180 billion in student loan debt for about five million Americans, he failed to enact the sweeping relief he’d envisioned. A maze of litigation and congressional opposition stood in the way.
Scott Buchanan, the executive director of the Student Loan Servicing Alliance, which represents student loan servicers, said the strategy mirrors a broader effort by the Biden administration to shield federal rules – which can take years to finalize – from being altered or dismantled after the president leaves office.
“The new administration could come in and change the language to whatever they want,” Buchanan said.
Education Department officials spent years pushing the regulations through red tape. After months of public debate, the far-reaching proposals were greenlit by a panel of federal negotiators in February. The department released one of the plans in April and promised that borrowers could expect debt relief as early as fall 2024. They released another plan 11 days before the November election.
Both plans will now be tossed, according to the announcement on Friday.
What did Biden’s student debt cancellation plans promise?
One of the plans would have forgiven up to $20,000 of unpaid interest for more than 20 million borrowers, the White House said in April. More than four million borrowers in repayment for 20 years or more would have been eligible to have their debt canceled in full.
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The other policy would have canceled the debt of borrowers the federal government determined were likely to default on their loans in the next two years. (To qualify, those borrowers also needed to meet criteria related to their preexisting debt, household income and assets.)
The second plan would have created a new application offering debt relief to borrowers experiencing different types of economic hardship, including medical debt, losses due to natural disasters and child care expenses.
Advocates for borrowers said Friday’s about-face left them frustrated. Braxton Brewington, the press secretary at the Debt Collective, said now that Biden’s larger plans are off the table, he hoped officials would spend the waning days before Trump’s inauguration fast-tracking relief for specific types of borrowers, such as people defrauded by predatory colleges.
“In some ways, it actually does make sense to not move forward with plans that were, in our eyes, destined to fail,” he said. “It’s just a shame that we’ve wasted so much time.”
Rules about trans athletes, textbook fees nixed
In addition to tossing aside the student loan proposals, the agency moved Friday to officially rescind a suggested policy that would’ve clarified the rights of transgender athletes.
Changes to rules concerning college accreditation and textbook fees were officially quashed, too.
Other regulations, to expand federally funded college access programs to undocumented students and require attendance-taking in online college courses, may still make it through before Trump takes office.
Zachary Schermele is an education reporter for USA TODAY. You can reach him by email at [email protected]. Follow him on X at @ZachSchermele.
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