In August, Joe Biden unveiled a program that would provide $500 billion in student loan forgiveness. His next move could be controversial.
The Department of Education unveiled a new program that would allow students to reduce their monthly student loan payments by up to 5% of their income. In most cases, the loans would be forgiven after around 20 years.
"The goal of the program is to make student loan repayment easier and more manageable. According to Miguel Cardona, the Education Secretary, the proposed regulations would help students avoid default and delinquency by reducing their monthly payments in half."
Under the proposed regulations, borrowers would only have to make payments of no more than 5% of their discretionary income. Individuals with incomes less than that amount, or families with four members making less than $62,400, would not have to make any payments at all. The remaining balance of their loans would be forgiven after around 10 to 20 years.
The regulations, which are scheduled to be published in the federal register on Wednesday, will allow voters to comment on them for a 30-day period. As Biden continues to move toward executive action, conservative groups have been increasing their efforts to have their voices be heard.
The proposed regulations have been criticized due to concerns about the budget. According to Adam Looney of the Brookings Institution, the program would turn most student loans into untargeted grant programs.
The regulations would not cap the amount of money that borrowers would save and eventually have forgiven due to how the program is based on the amount of their loans.
According to him, the plan would help students by reducing the costs of college. It would also allow them to avoid owing back their loans.
The program would allow the government to take over another $100 billion in loans every year. Taxpayers would be on the hook for any forgiven amounts.
"According to Looney, the proposal would only provide a free ride to college if a student chooses to study at a for-profit institution. He noted that the regulations would eliminate the last remaining policy that prevents predatory schools from participating in the program."
According to the Education Department, the lifetime payments that would be made on these loans would be around 83% lower for borrowers in the bottom third of income.
A panel that monitors the federal budget criticized the plan, arguing that it would not address the cost of college and that it would not be sustainable.
The White House and the Education Department did not provide the Washington Examiner with details about how the plan would be funded.
In addition, the White House noted that the regulations would hold colleges and universities accountable for their actions. They said that these programs would be required to provide financial value to their students or risk losing federal financial support.
Virginia Foxx, the head of the House Education Committee, called the plan a "shame list" that would not help students.
"Despite the various benefits of the plan, such as the availability of more repayment options, the cost of college will still remain high. As a result, she criticized the plan's implementation, which she said would turn the student loan program into a "grant program." She also noted that the administration's plan would not help students because it would not fix the country's education financing system."
One of the key questions that remains regarding the plan is whether or not the president has the legal authority to implement it on his own. Due to a recent change in the Supreme Court's ruling on executive authority, it is expected that the program will be struck down.
Political science professor Gregory Caldeira of Ohio State University noted that the plan could end up in court.
"Everything attracts lawsuits," he said. "This one will too."
The preceding is a summary of an article that originally appeared on Washington Examiner.
