NerdWallet: A backup plan offers hope for borrowers if Supreme Court blocks student loan cancellation

by | May 22, 2023 | Stock Market

This article is reprinted by permission from NerdWallet. The Supreme Court might strike down President Joe Biden’s sweeping student debt relief plan in the coming weeks — but the more than 40 million borrowers eligible for up to $20,000 in loan cancellation could still have hope if the White House pursues a “Plan B.”

The Higher Education Act, or HEA, could unlock an alternate route for broad student debt cancellation. Signed by President Lyndon B. Johnson in 1965, the landmark legislation laid the foundation of the modern U.S. college funding system. It established and governs grants, federal loans and other programs to help students pay for school, and it empowers the secretary of education to “compromise, waive, or release” federal student loans. The HEA “has changed over time to reflect the needs of society,” says Twinette Johnson, a law professor and interim dean at the University of the District of Columbia School of Law. But even as the HEA has expanded, Johnson says, it must continue to serve its core purpose: “to make higher education more accessible and to remove the blocks that may impede that access.” But the White House hasn’t yet announced a student debt cancellation Plan B via the HEA or otherwise — so borrowers should prepare as if bills will resume on their total loan balance, sans relief. Related: What the Supreme Court’s decision to let $6 billion in student-loan relief move forward means for borrowersThe HEA’s debt cancellation history Two major lawsuits currently pending a Supreme Court ruling have derailed Biden’s Plan A, which would cancel debt via the Heroes Act of 2003. Passed …

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