Higher Ed Policy Roundup: Vol. 7 - Issue 23
This Week in Washington
This Week in Washington
Late last week, the U.S. Supreme Court struck down the Biden-Harris Administration’s debt relief plan that would have cancelled up to $20,000 of student debt for Federal student loan borrowers. In a 6-3 decision, the Court ruled that the Administration’s forgiveness plan was an overreach of its executive power.
In a statement following the Supreme Court’s ruling, President Biden said that his Administration would pursue an alternative path using the Higher Education Act to provide borrowers with debt relief. The Education Department (ED) followed up with a notice of its intent to hold a Negotiated Rulemaking session to draft regulations relating to the modification, waiver, or compromise of Federal student loans, beginning with a public hearing scheduled for July 18. For borrowers who cannot afford payments when they resume in October, President Biden also unveiled a temporary “on-ramp” period of 12 months that will allow those borrowers to avoid the consequences of missed payments.
On Monday, ED released an unofficial copy of its new income-driven repayment plan called the Saving on a Valuable Education (SAVE) plan. The SAVE plan, which will be officially released on Monday July 10, 2023, will have two separate implementation dates. On July 30, 2023, the following changes will take effect:
- Increasing the discretionary income threshold from 150 percent to 225 percent of the federal poverty rate;
- Adjusting the treatment of spousal income for married borrowers who file separately; and
- Eliminating the accumulation of unpaid interest.
The following will be implemented on July 1, 2024:
- Requiring borrowers with only undergraduate debt to pay five percent of their discretionary income monthly; require borrowers with only graduate debt to pay 10 percent of their discretionary income monthly; and require borrowers with both undergraduate and graduate debt to pay between five and 10 percent of their discretionary income based upon a weighted average;
- Providing student debt forgiveness after 10 years to borrowers with an original student loan principal balance of $12,000 or less;
- Providing borrowers with credit for certain deferments and forbearances;
- Preventing payments from fully resetting after consolidation;
- Automatically enrolling delinquent borrowers into an IDR plan; and
- Phasing out new enrollments in other IDR plans (e.g., ICR and PAYE).
News You Can Use
Historically Black Colleges and Universities expect an influx of student applicants after the Supreme Court barred schools from using race as a factor in admissions.
The National Association for Financial Aid Administrators published an article discussing the financial aid implications of the Supreme Court's ruling on affirmative action.
The Biden-Harris Administration's new student loan forgiveness plan may face legal challenges in the coming months.
The Supreme Court's ruling on student loan forgiveness could limit emergency relief efforts moving forward.
There were no relevant student-aid related bills recently introduced for consideration by the 118th Congress (2023-2024).