President Joe Biden is striving to erase approximately $127 billion of student loan debt, even in the face of a U.S. Supreme Court decision that chastised him for circumventing Congress.
As per information from The Wall Street Journal, Biden and his team are exploring different regulatory and executive avenues to alleviate over 3 million student borrowers from $127 billion in obligations.
Previously, Biden’s ambitious $430 billion proposal, termed the “Heroes Act,” aimed to eliminate up to $20,000 of student loans for a projected 40 million U.S. citizens. However, in June, this proposal was rejected with a 6-3 verdict by the U.S. Supreme Court. The court expressed that the power to wipe out federal debt lies primarily with Congress.
The court’s dominant view emphasized, “The fundamental decisions related to extensive debt relief programs are likely those Congress intended to manage. The HEROES Act doesn’t grant permission for such an initiative by the Secretary of Education, even when assessed through usual legislative interpretation.”
This renewed endeavor by the Biden administration to obliterate the $127 billion marks roughly 30% of his initial agenda since his inauguration in 2021, the report suggests.
Data from the Journal showcases a staggering debt of $1.6 trillion accumulated by 40 million student borrowers across the country.
Of this, about $34 billion has been absolved due to borrowers alleging educational fraud or other legal resolutions that hadn’t been addressed. Also, over half a million borrowers with lasting disabilities have benefited. An additional relief of $51 billion reached over 715,000 people in public service roles, and a saving of $42 billion was reported for 850,000 borrowers due to discrepancies in the income-based repayment scheme.
This initiative to further dissolve the student loans coincides with the recommencement of payments paused three years ago because of the COVID-19 crisis.
However, this repayment resumption hasn’t been without hitches.
A recent update from The Washington Post highlighted that the Missouri Higher Education Loan Authority, a loan service provider, failed to provide “on-time statements” to around 830,000 borrowers. This lapse resulted in these borrowers missing their inaugural repayment since the recommencement.
Consequently, the Biden administration is mulling over a penalty of $7.2 million from the agency’s contract for these oversights.
Education Secretary Miguel Cardona asserted, “We won’t let borrowers bear the brunt of severe servicing lapses.”
