By In the end, the Constitution wins, and Joe Biden’s wealthy donors aren’t going to get their Christmas gifts this year. The White House has officially withdrawn two major student loan forgiveness plans, marking a significant setback for efforts to give billions of dollars to some of the highest earners in the country, according to a new report from Forbes.
The first of the now-canceled plans, commonly referred to as “Plan B,” aimed to assist four distinct groups of borrowers: those whose balances had ballooned due to interest accumulation, individuals who attended low-performing or predatory institutions, long-term borrowers who have been repaying loans for over two decades, and those eligible for forgiveness programs who had not yet applied. The second initiative targeted borrowers facing severe financial or personal hardships, with relief determined by automated indicators like income levels, debt-to-income ratios, eligibility for federal aid programs, and disability status. Some borrowers would also have had the option to apply for individual assessments. Together, these two plans were projected to assist over 30 million borrowers struggling with mounting debt.
The cancellation follows ongoing legal challenges, including court injunctions preventing the implementation of “Plan B.” Furthermore, the hardship-based forgiveness plan was not expected to be finalized until 2025, well beyond the current administration’s term. With a Trump administration poised to potentially take office in January, officials may have chosen to preemptively withdraw these plans to prevent their revision or repurposing in ways that could undermine borrower protections. Additionally, withdrawing the proposals now could render ongoing lawsuits moot, avoiding judicial rulings that might restrict future debt relief efforts under the Higher Education Act.
The Department of Education stated it was terminating the attempt to have the working class pay for the student loans of families too wealthy or not smart enough to win financial aid or scholarships from their universities due to “operational challenges in implementing the proposals.” It said it would “commit its limited operational resources” in these final weeks of the administration “to helping at-risk borrowers return to repayment successfully.”
Earlier in the year, Biden bragged about ignoring the Constitution after the Supreme Court ruled that he could not simply hand out cash to his core supporters through “loan forgiveness.”
turns out there’s an entire political movement that is 100% above the law and they regularly brag about it https://t.co/QtmTNJQKHd
— Logan Hall (@loganclarkhall) February 22, 2024
Democrats do not actually believe the president has the authority to offer blanket loan forgiveness. Nor do they think it’s helping those in need.
“People think that the president of the United States has the power for [student loan] debt forgiveness. He does not.”
— Nancy Pelosi (July 2021)pic.twitter.com/0iz8uQeKXG
— RNC Research (@RNCResearch) February 21, 2024
New Conservative Post noted in February that while student loan forgiveness often gets pitched as helping those in need, in reality, the policy is merely a handout to wealthy liberal urbanites who spent way too much on college but reliably vote Democratic. After all, most universities have need-based aid and scholarship programs. Those who typically take out large loans are from upper-middle-class and well-to-do families.
Analysis from the Committee for a Responsible Budget (CFRB) revealed “that America’s highest earners will reap nearly two thirds of the giveaway. That means for 87 percent of American adults without student loans, President Biden is sticking them with a nearly $600 billion tab.”
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