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Biden calls SCOTUS decision "unthinkable," outlines new path to student loan forgiveness

President Joe Biden said the U.S. Supreme Court's (SCOTUS) decision that scraps his student debt relief program was wrong and has outlined a new path toward relief.

President Joe Biden offered two new approaches to help borrowers deal with their student debt burden following the U.S. Supreme Court's decision to block his student loan forgiveness plan.

Biden said in a press conference late Friday afternoon that he was "discouraged and angry" like so many millions of Americans who had expected the court would uphold the plan.

"Today, the Supreme Court sided with Republican elected officials, blocking relief to over 40 million working and middle-class Americans," Biden said. "I believe the Court’s decision is wrong – I will not stop fighting to deliver relief to borrowers who need it the most."

With the original debt forgiveness plan now off the table, Biden outlined two new paths for Americans to find debt relief.

The first will model student debt forgiveness with a different law—the so-called Higher Education Act (HEA). HEA includes a provision that allows the Secretary of Education to compromise, waive or release federal student loans.

"It's legally sound, but it will take longer to bring relief to many borrowers," Biden said.

Second, the administration is creating a temporary 12-month "on-ramp" to repayment, Biden said. Monthly payments and interest will accrue during this time, but borrowers that can't pay can use the on-ramp to avoid hurting their credit.

"This is not the same as the student loan pause, but during this period – if you miss payments – this 'on ramp' will temporarily remove the threat of default or having your credit harmed," Biden said.

If you hold private student loans, you could consider refinancing these to a better interest rate to lower your monthly payments. Visit Credible to compare options from different lenders and choose the one with the best rate for you.

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Biden said his failed student debt forgiveness plan would have benefited Americans and the economy. 

The plan would have canceled up to $10,000 in federal loans per borrower making less than $125,000 a year (couples making less than $250,000) and up to $20,000 per borrower for those who used Pell Grants in college, eliminating about $441 billion in outstanding student debt. The plan was poised to mainly impact borrowers making less than $75,000 a year, and none of it would have gone to people making more than $125,000, according to the White House.

In the less than four weeks that the application for forgiveness was available, 26 million people either applied for debt relief or had already provided sufficient information to the Department of Education to be deemed eligible for relief, according to a White House fact sheet

However, the president's initiative faced several lawsuits. Two of those went before the Supreme Court and questioned Biden's use of the Higher Education Relief Opportunities for Students (HEROES) Act of 2003 to enact the plan. The HEROES Act of 2003 allows Congress to waive restrictions on student loan relief in the face of a national emergency. 

On Friday, the Supreme Court held that the Administration needs to have Congress' backing for the costly plan and rejected arguments that the Higher Education Relief Opportunities for Students (HEROES) Act of 2003 gave Biden authority to enact the plan.

The president encouraged borrowers to look at the several initiatives his Administration has worked on as possible avenues toward forgiveness. 

Biden cited the option for loan forgiveness through the Public Service Loan Forgiveness (PSLF) program, which can eliminate student loan debt for eligible government or nonprofit employees. The Department of Education recently said it approved $42 billion in student loan forgiveness through updates to the PSLF program. 

The President also cited increases to Pell Grants, forgiving loans for teachers, firefighters, and the new debt repayment plan, which limits payments from exceeding more than 5% of their discretionary income.

If you are interested in paying down your private student loan debt, a refinance could help you lower your interest rate and monthly payment. To see if this is the right option for you, contact Credible to speak to a student loan expert and get your questions answered.

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Republican lawmakers who largely opposed Biden's forgiveness plan applauded the court's decision.

"President Biden's regressive student loan bailout not only violated the law and Constitution, but it contradicted basic fairness—to the majority of people who couldn't afford to go to college, to the taxpayers who would have shouldered the burden, and to every student who worked their way through school or responsibly paid back their student loans," House Budget Committee Chairman Rep. Jodey Arrington, R-TX said in a statement.

Senate Republican Leader Mitch McConnell, R-KY, issued a similar statement supporting the court's decision that the plan is unlawful.

"The President of the United States cannot hijack twenty-year-old emergency powers to pad the pockets of his high-earning base and make suckers out of working families who choose not to take on student debt," McConnell said. "The court's decision today deals a heavy blow to Democrats' distorted and outsized view of executive power."

On the other side of the aisle, Democratic lawmakers who believed that the President did have the legal authority to enact the plan under the HEROES Act, blasted the court's decision.

"The same Supreme Court that overturned Roe now refuses to follow the plain language of the law on student loan cancelation," Senator Elizabeth Warren (D-MA) said in a tweet. "This fight is not over. The President has more tools to cancel student debt — and he must use them. 

"More than 40 million hard-working Americans are waiting for the help that President Biden promised them, and they expect this Administration to throw everything they've got into the fight until they make good on this commitment," Warren continued.

Senate Majority Leader Chuck Schumer, D-N.Y., said the Biden Administration would have to explore other avenues as millions of borrowers are set to resume payments on student loans in October. 

"With the pause on student loan payments set to expire in weeks, the Biden administration must do everything in its power to deliver for millions of Americans struggling with student loan debt," Schumer tweeted. "The admin has remaining legal routes to provide broad-based student debt cancelation."

Borrowers with private student loans could still find relief by refinancing to lower their monthly payments. Visit Credible to find your personalized interest rate without affecting your credit score. 

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