Dozens of Democrats on Capitol Hill are urging President Joe Biden to make good on his promise of student loan debt relief as interest accruement is set to resume next week.
“In the wake of this outrageous decision, we appreciate your announcement initiating a rulemaking under the Higher Education Act of 1965 to deliver on debt relief and write to urge you to swiftly carry out your commitment to working and middle-class families and cancel student debt by early 2024.”
The plan was denounced by critics as constitutionally questionable and unfair to the taxpayers who would be forced to shoulder the burden, which estimates placed at upward of $400 billion.
The court, in a 6-3 decision, found that the Biden administration had overstepped its authority with the sweeping plan and would need congressional consent before undertaking such an expensive endeavor.
The administration has since sought to circumvent the court’s ruling by implementing the plan through the negotiated rulemaking process under the Higher Education Act of 1965. But that route involves a much longer process that could fail if Congress overturns the final rule under the Congressional Review Act.
In the interim, the administration has provided a so-called on-ramp to debt repayment. From Oct. 1, 2023—when repayment resumes—through Sept. 30, 2024, borrowers who miss their monthly payments will not be considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies.
But for congressional Democrats, that measure was not enough to assuage their concerns.
“While we understand your administration’s efforts in providing a 12-month ‘on-ramp’ starting on October 1, 2023, to protect borrowers during the transition to repayment, we remain gravely concerned about the Department of Education’s projections that without additional relief, student debt delinquencies and defaults will spike once repayment resumes,” the lawmakers wrote.
“The Department of Education should work to ensure that implementation of the final rule to provide debt relief does not happen after the 12-month on-ramp ends in an effort to further reduce the risk of delinquency and default,” they added, urging the president to use his authority to “help borrowers as quickly as possible.”
According to the White House, the Saving on A Valuable Education (SAVE) plan calculates payments based on a borrower’s income and family size instead of their loan balances.
“The SAVE Plan is a game-changer,” Education Secretary Miguel Cardona told reporters on an Aug. 22 call. “Take a nurse earning $77,000 a year, married with two kids. With SAVE, their payment will drop from $267 a month to just $40 a month. That’s over $2,700 a year in savings.”
Additionally, individuals earning under $32,000—or $67,000 for a family of four—will have their payments reduced to $0.
Announcing the plan in a video, President Biden estimated that it would save the average borrower about $1,000 per year.
“As long as you pay what you owe under this plan, you’ll no longer see your balance grow because of unpaid interest,” he said.
Enrollment for the program opened on Aug. 22.
