President Joe Biden’s new student loan forgiveness plan has legal experts divided, with some citing similar problems to his previous plan struck down by the U.S. Supreme Court.
The Biden administration’s Saving on a Valuable Education Plan is an income-based student loan repayment plan that provides full loan forgiveness in certain cases.
For example, the plan gives “borrowers who originally borrowed $12,000 or less forgiveness after as few as 10 years,” according to the Federal Student Aid website.
However, Kansas and 10 other states recently filed a lawsuit challenging SAVE, saying the Department of Education does not have the authority to alter or cancel student loan repayment plans. A group of state attorneys general also filed a second lawsuit.
Sheng Li, litigation counsel at New Civil Liberties Alliance, a nonprofit law firm dedicated to fighting unlawful administrative power, told The College Fix the plan is based on a misinterpretation of the Higher Education Act.
“The president has interpreted the 1993 statute’s grant of authority to create plans that provide for repayment of loans to mean he can create plans that provide for the total cancellation of loans. He is wrong,” Li said in a recent email.
Li said Biden’s previous student loan forgiveness plan, which the Supreme Court struck down in Biden v. Nebraska, had a similar problem.
In that case, the plan “attempted to cancel up to $20,000 of loans for 40 million borrowers immediately,” he told The Fix.
While the SAVE Plan “does not generally provide for immediate cancellation,” Li said it “significantly reduces a participating borrowers’ monthly payments, down to zero for many borrowers.”
Then, “after 20 years of making very low or zero payments, participating borrowers will have their loans canceled, which obviously results in significantly more cancellation than if they had been making regular monthly payments that whole time,” he said.
He said the plan is estimated to cost “$475 billion over a ten-year period.”
However, Kate Elengold, an assistant professor at the University of North Carolina School of Law, said the SAVE Plan is within the authority of the Department of Education.
She signed an amicus curiae opinion to the Supreme Court in support of Biden’s initial plan
