Biden looks to the Higher Education Act as a backdoor effort to forgive student loans
Previously, the Biden Administration hoped to forgive student debt under the provisions of the HEROES Act.
After the Supreme Court ruled against it, the White House now looks to the Higher Education Act as its potential backdoor golden ticket.
On student borrowing, the Biden Administration remains unwilling to let the Supreme Court be the final word.
According to reporting by ABC News, the president’s staff is scrambling, currently considering using the Higher Education Act (HEA) of 1965 as a substitute grounds for student loan forgiveness.
[RELATED: SCOTUS strikes down Biden student loan forgiveness plan]
Title IV of the HEA authorizes the Department of Education to forgive certain loans, of which the Supreme Court wrote in Biden v. Nebraska, “The Act authorizes the Secretary of Education to cancel or reduce loans in certain limited circumstances.”
”The Secretary may cancel a set amount of loans held by some public servants. He may also forgive the loans of borrowers who have died or become ‘permanently and totally disabled;’ borrowers who are bankrupt; and borrowers whose schools falsely certify them, close down, or fail to pay lenders.”
As ABC News reports, the extent of Biden’s backup plan remains undefined compared to the previous estimate under the HEROES Act of covering “43 million borrowers—with 20 million expected to see their student loans entirely erased.”
According to previous news coverage and the Supreme Court’s analysis, that amounts to “$430 billion of student loan principal.”
[RELATED: ‘Pay your bills like adults!’: Protesters take to White House after student debt ruling]
The Higher Education Act, however, may authorize the Secretary of Education to waive outstanding debts under the provisions for federal direct consolidation loans.
Secretary Cardona’s authorization to “compromise, waive, or release any right, title, claim, lien, or demand” cited by ABC News derives from Section 432 of the Higher Education Act. That section makes provisions for the Secretary of Education to pursue debt relief according to the Federal Direct Consolidation Loan (DCL) Program.
Under the program, explains the Congressional Research Center, students can have the federal government issue a loan to repay the students’ federally guaranteed privately-held loans. The federal government then becomes the primary holder to which those students make payments.
According to the DOEd’s federal student loan portfolio, the amount of student debt under the DLC program remains unspecified. However, outstanding debts under the broader Federal Direct Loans Program total $1.45 trillion as of this article’s writing.
