Since 1980, the total cost of public and private four-year colleges has nearly tripled. Student loan debt has ballooned to more than $1.6 trillion for more than 45 million borrowers. A third of borrowers never graduate, and those who graduate do so with almost $25,000 in debt.
To help middle-class and working-class American borrowers, the Biden administration announced a three-part plan in August to forgive a portion of borrowers’ student loans. Part of his plan and campaign promise was to forgive $10,000 in student debt for tens of millions of borrowers. It increased the relief to $20,000 for borrowers who received a Pell grant in college.
Biden’s plan has met with legal opposition and criticism.
“At this point in our economy, we really don’t need to add $500 billion in deficit spending for a purpose that frankly includes wealthy law students and business school graduates receiving tens of thousands of dollars,” said Harvard economics professor Jason Furman. and former chairman of the Council of Economic Advisers, during an interview with CNBC in August.
In October, courts blocked the plan from proceeding due to lawsuits from Republicans, states and individuals.
The Supreme Court has agreed to hear two such legal challenges: one brought by six GOP-led states that argue the pardon will hurt businesses in their states that deal with federal student loans, and another involving two plaintiffs who claim to have been harmed by the contract by the fact that they are partially or totally excluded from debt forgiveness.
Biden’s attorneys have denied the claim that the Biden administration was overstepping its authority, exposing the White House’s argument that it was acting within the law. He points to the fact that the Heroes Act of 2003 grants the US Secretary of Education the power to override student loan regulations in the event of a national emergency.
Federal student loan repayments won’t resume until the end of August unless the dispute over the Biden administration’s student loan forgiveness plan is resolved sooner.
Watch the video above to learn more about what’s at stake in the battle for student loan forgiveness.