Biden Administration Reveals New Plan To Help Student Debt Burden

Biden Administration Reveals New Plan To Help Student Debt Burden

( – Last year, President Joe Biden caused major controversy across the United States when he announced a federal student debt relief scheme that would have erased up to $20,000 in loans for eligible academic borrowers. However, the plan largely failed to get off the ground due to a number of legal challenges. The administration has since been scrambling to reduce the burden on student borrowers regardless of the difficulties the plan has been facing.

New Department of Education Proposal To Help Struggling Borrowers

The proposed measure came from the Department of Education (DOE) on Tuesday, January 10, and relates to the Revised Pay As You Earn (REPAYE) system. That framework allows student borrowers to limit their debt repayments to a certain portion of their discretionary earnings each month. The Biden Administration wants to reduce the monthly obligations plan participants currently face.

Right now, the lowest payments any borrower enrolled in the REPAYE program must make equate to 10% of their discretionary income. The proposal on the table would reduce the limit to 5%. This change could reportedly see borrowers paying as much as $2,000 less each year to meet their obligations.

What’s Happening With Loan Forgiveness?

The Biden Administration released its plan to forgive student loan debt last year. The intention was to wipe up to $10,000 for borrowers making less than $125,000 individually, or less than $250,000 in overall household income. The forgiveness amount rose to $20,000 for student borrowers who were in receipt of a Pell grant.

However, it wasn’t long before the legal challenges started pouring in. Right-wing advocacy groups and Republicans filed at least six lawsuits alleging the policy was inconsistent with the powers of the presidency and that Congress needed to be involved in any attempt to issue broad-based forgiveness of student loans. Two of those cases are now scheduled for the US Supreme Court.

One of the challenges was filed by six Republican-led states and argues that the debt relief program oversteps presidential authority. The crux of the argument is that the administration’s reliance on the HEROES Act to justify its debt forgiveness is legally inappropriate.

The plaintiffs in the second are two student borrowers who have asserted the debt forgiveness program is unfair to them. One was not a Pell grant recipient and is protesting that he did not receive the upper level of forgiveness, while the other is ineligible for any relief because her debt is commercially held.

SCOTUS is scheduled to hear these matters at the end of next month.

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