On Thursday, the U.S. Department of Education will formally announce it's backing down from its latest attempt to offer student loan forgiveness. This news was initially teased on December 20, the same day President Joe Biden shared the good news of debt cancellation for 55,000 public service workers. The White House boasts of relieving nearly 5 million people under Biden's administration.
So, why the change of plans? The department cited the main reason as the logistical nightmare of trying to implement the proposed rules before President Biden's term ends. Instead, they’ll zero in on court-ordered settlements and assist borrowers in getting back to making their payments.
Remember that Supreme Court ruling? Back in June 2023, the court shot down an ambitious Biden plan to forgive up to $20,000 in debt for many students with federal loans. That plan would have cleared an estimated $430 billion in a decade. The court ruled in a 6-3 decision that the White House lacked the authority to cancel debts without Congress's nod, and, unsurprisingly, Congress didn’t have the votes to make it happen.
What were Biden's next steps? Just 10 days after the court's ruling, the Biden administration rolled out the SAVE Plan (Saving on a Valuable Education) in another bid to cancel student loans. However, this effort faced a lawsuit from Missouri and six other states in April.
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