Biden's Student Loan Cancellation Gets a New Challenger

Joe Biden's plan B to reduce the over $1.6 trillion that borrowers owe in student loans is already facing pushback, and one House Republican said he's hopeful the Supreme Court will block the president's Saving on a Valuable Education (SAVE) plan.

A spokesperson for Representative Ralph Norman told Newsweek that the South Carolina Republican would support efforts in the House to stop Biden's latest debt forgiveness plan. But the spokesperson said such legislation is unlikely to get through the Democratic-controlled Senate or to be signed into law by the president.

"This means it'll fall on the judicial branch to, once again, slap down Biden's unconstitutional, inappropriate overreach," Norman's communications director, Austin Livingston said. "It's not a matter of if that will happen but instead when."

In the wake of the Supreme Court's recent decision to strike down Biden's original loan forgiveness plan, the president unveiled the final details of a separate relief program. Beginning this summer, millions of Americans will be able to enroll in SAVE. The income-driven repayment plan offers lower monthly payments, limitations on interest accrual and faster loan forgiveness for borrowers with small balances.

Unlike the administration's one-time forgiveness plan, which canceled $10,000 in federal student loans per borrower and an additional $10,000 for Pell Grant recipients, the SAVE plan aims to protect borrowers with low earnings from unaffordable student debt once payments resume in October.

Read more: Student Loan Forgiveness Updates and FAQs: Who Qualifies and How To Apply

At the same time, some borrowers could still be seeing student debt cancellation. If borrowers' earnings are low enough, their monthly bills could be as small as $0. Since balances won't increase as long as borrowers make their monthly payments, those with $0 payments won't see their interest snowball. Then, after 20 or 50 years, any remaining debt—which could be the same as it was when the SAVE plan began—would be erased.

Those with relatively low balances will see loan forgiveness more quickly, starting next July, when borrowers with initial balances of $12,000 or less get the remainder of their loans canceled after 10 years of repayment. The higher the balance beyond that threshold, the longer borrowers will have to wait for their remaining loans to be wiped out.

Last month, the Supreme Court ruled that the Biden administration did not have the power under the HEROES Act—a post-9/11 law that gives the education secretary the power to "waive or modify" student loans during a national emergency—to unilaterally cancel federal student debt. The Court's majority decided that the law's language was not specific enough to allow a federal department secretary to "alter large sections of the American economy" without congressional action.

Legally, the SAVE plan is different because instead of creating a new relief program from scratch, like the one-time cancellation, Biden is proposing changes to an existing repayment plan, the Revised Pay as You Earn plan created by the Obama administration in 2016. It's also different because instead of using the HEROES Act to do so, the Biden administration is relying on the 1965 Higher Education Act, which allows the Education Department to develop federal regulations without Congress.

Newsweek reached out by email to the White House for comment.

"The new plan Biden announced has a higher chance of surviving lawsuits, but with a 6-3 conservative supermajority, nothing is certain," Dan Urman, a professor at the Northeastern University School of Law, told Newsweek on Monday.

"I would not be surprised to see this decision end up back in the legal system, with cases immediately making their way through the courts," he said. So far, no lawsuits have been filed against the SAVE plan.

Even though using the Higher Education Act will make the new repayment plan "less of a 'stretch'" of Biden's authority, Urman said, he still anticipates that lawsuits against the program will argue that the administration is going beyond what he can do without congressional approval.

While there are differences between the two programs, Livingston said, "the objective remains unchanged." So Norman doesn't see the SAVE plan avoiding the same legal arguments that were made before the Supreme Court this term.

"The funds needed to repay those loans must come from somewhere," Livingston said. "Biden is trying to take students loan obligations and offload them to other people who did not take out those loans and who did not receive the benefit of the education."