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| US President Joe Biden addresses the nation on averting default and the Bipartisan Budget Agreement, |
Let's explore what this veto means for borrowers.
Biden Exercises Veto Power to Protect Student Loan Forgiveness and Loan Pause
Last week, Congress successfully passed a joint resolution utilizing the Congressional Review Act (CRA) to block President Biden's prominent student loan forgiveness initiative. This program, if implemented, would have granted millions of borrowers up to $20,000 in debt relief. Additionally, the CRA resolution sought to invalidate the President's latest extension of the ongoing student loan pause, which has suspended payments and halted interest accrual for most federal student loan recipients since March 2020.
Warnings were issued by advocates for borrowers about the potential disastrous consequences of enacting the Congressional Review Act bill. They expressed concerns that the bill would not only deny borrowers student loan forgiveness but also lead to the reinstatement of discharged loans for hundreds of thousands of borrowers due to the reversal of PSLF or Income-Driven Repayment credits received during President Biden's recent extension of the student loan pause. Some advocates even suggested that borrowers might be required to retroactively repay the accrued interest during that extension period.
In response to the bill's passage, President Biden made a statement yesterday, saying, "Congressional Republicans led an effort to pass a bill blocking my Administration's plan to provide up to $20,000 in student debt relief to working and middle-class Americans. I won't back down on helping hardworking folks. That's why I'm vetoing this bill."
By vetoing the bill, President Biden ensures that the Congressional Review Act resolution will not become law, despite its passage in both the House and the Senate. To override the veto, Congress would need a two-thirds majority in each chamber. However, Republicans acknowledged that, even with the support of some Democrats who voted against Biden's debt relief plan, they would fall significantly short of the required threshold.
It is worth noting that the Congressional Review Act can only be used to repeal recently enacted regulations, rendering this particular effort to nullify Biden's student debt relief plans effectively dead.
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Biden Preserves Student Loan Forgiveness, But Ends Student Loan Pause, In Debt Ceiling Bill
Separately, President Biden recently signed a bill to raise the debt ceiling, representing a compromise between the White House and congressional Republican leadership. As part of this negotiated agreement, Biden succeeded in preserving his student loan forgiveness plan. However, he agreed to officially end the student loan pause later this summer.
It is important to distinguish between ending the student loan pause through the debt ceiling bill and the repeal efforts under the Congressional Review Act. The Congressional Review Act resolution would have nullified Biden's most recent extension of the student loan pause, potentially causing chaos for borrowers who benefited from the extension over the last several months. Conversely, the debt ceiling bill does not retroactively reverse the latest extension but rather codifies that the student loan pause will conclude 60 days after June 30, a timeline that the Biden administration had already indicated.
Despite these developments, advocates for student loan borrowers have criticized Biden's compromise, arguing that eliminating the possibility of another extension of the payment pause will undermine the administration's ability to assist borrowers. Additionally, a recent report from the Consumer Financial Protection Bureau, released this week, suggests that millions of borrowers may not be adequately prepared for an abrupt resumption of repayment.
Supreme Court Will Soon Rule On Biden’s Student Loan Forgiveness Plan
Although President Biden has successfully neutralized Republican-led efforts to repeal his student loan forgiveness plan through Congress, the initiative remains at risk. Last fall, two federal courts blocked the program in response to legal challenges, and the administration has appealed those decisions to the Supreme Court. A final ruling on Biden's student debt relief plan is anticipated this month and could be announced as early as next week.
Advocates have been urging the Biden administration to consider alternative options for student loan forgiveness in the event of an unfavorable Supreme Court ruling. However, officials have publicly stated that there are currently no backup plans under consideration.
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