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The New Student Debt Plan


The type of internet leftist who thinks that Biden can rule by fiat should have learned something when Biden tried to go big on student loan forgiveness and the Supreme Court told him no, based on the legal principle of “fuck Democrats.” They probably won’t learn anything. But Biden’s backup student loan plan seems pretty solid and almost legally impervious to challenge from those who want to keep generations of Americans in lifetime financial purgatory.

President Biden’s new repayment plan for federal student loans will cost the government $475 billion over the next decade, according to a new economic projection. The updated income-driven repayment plan would surpass the $400 billion cost of the debt forgiveness plan that the Supreme Court rejected last month.

The new repayment plan, announced last year and completed this month by the Education Department, offers borrowers a new option that caps payments for undergraduate loans at 5 percent of the borrower’s income. After a borrower made payments for either 10 or 20 years (the term depends on the size of the loan), any remaining balance would be forgiven.

The government — the largest lender to Americans who borrow to pay for college — already offers a variety of income-based repayment plans. But a new and revised plan, which the administration has named Saving on a Valuable Education, or SAVE, is vastly more generous. That means the government, not borrowers, will ultimately pay a bigger share of the recipients’ educational costs.


Conservative groups and Republican lawmakers have forcefully denounced the new plan. Representative Virginia Foxx, the North Carolina Republican who leads the House Committee on Education and the Workforce, called it “nothing more than a backdoor attempt to provide free college by executive fiat.”

But so far, no legal challenges have emerged. The plan’s foundation is the Higher Education Act of 1965, which gives the Education Department broad authority over loan repayment plans. By contrast, the debt forgiveness plan that the Supreme Court struck down relied on the HEROES Act, which gave the education secretary greater powers only in times of “national emergency” — as the government declared the coronavirus pandemic to be.

More broadly, legal groups that would like to challenge the plan are struggling to find a party with the legal standing to do so. The Pacific Legal Foundation, which backed several of the lawsuits against Mr. Biden’s student debt cancellation plan, said it would like to litigate the new plan but saw major obstacles.

“You have to demonstrate that you’re hurt by the free money or by a more generous loan forgiveness program,” said Caleb Kruckenberg, a lawyer for the foundation. “It’s not enough to say that I’m concerned about the government spending my tax dollars in this way. It’s just really a narrow universe.”

Get out your tiny violins and call the whhhhhhaaaaambulance!

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