U.S. President Joe Biden claimed that the U.S. Supreme Court’s decision to strike down his student loan relief plan was wrong. The Court ruled that President Biden overstepped his authority. The President, however, seems determined to do whatever it takes to enforce his plan. In a press conference, President Biden unveiled his alternative plan to counter the Court’s decision. He mentioned the use of the Higher Education Act.
The Higher Education Act is a law that was signed by President Lyndon Baines Johnson on November 8, 1965. Its purpose was to strengthen the educational resources of U.S. colleges and universities and provide financial assistance for students in post-secondary and higher education.
The Biden administration has said that it is still reviewing the Supreme Court's decision on student debt relief. However, the administration has said that it is committed to using the Higher Education Act to cancel student debt.
President Biden wants to use the Higher Education Act of 1965 to cancel student debt. The Higher Education Act gives the Secretary of Education the authority to "compromise, waive, or release any right, title, claim, lien, or demand" related to federal student debt. This means that the Biden administration could use this law to cancel student debt without needing to declare a national emergency.
The use of the Higher Education Act to cancel student debt is a controversial issue. Some people argue that it is the only legal way for Biden to cancel student debt. Others argue that it is an overreach of executive power.
The Biden administration has not yet announced how much student debt it would cancel under this plan. However, some advocates have called for Biden to cancel up to $50,000 in student debt per borrower.
The Biden administration is facing a number of challenges in its efforts to use the Higher Education Act to cancel student debt. One challenge is that the law is complex, and there is no clear precedent for using it to cancel student debt. Another challenge is that the administration will need to go through a public comment period before it can finalize any rules for loan cancellation.
The Biden administration believes that the use of the Higher Education Act is the best way to help millions of borrowers who are struggling with student loan debt. But again, the problem here is that the use of the Higher Education Act only offers short-term solutions. And these short-term solutions do not actually solve the issue for good. It only prolongs it. Sure, the cancellation of student loans will help existing borrowers but not future borrowers.
Indeed, the cancellation of student loan debt does not reduce the cost of higher education. The incoming students won’t see their tuition costs reduced as a result of this legislation being passed. On the contrary, it will incentivize universities to prop up the cost of tuition on the assumption that since students will have their loans forgiven no matter what, then there is no reason for universities to keep their tuition costs cheap.
This will then lead to more inflation in the process because the whole plan will cost the government billions of dollars. Where will the government get these billions of dollars? It will have to borrow from the Federal Reserve. Hence, the Federal Reserve will then increase the money supply, which in turn will increase the prices of goods and services. Inflation is the very reason why credit markets are currently tight. If there is more inflation as a result of this law, then it will make it even harder for borrowers to borrow because the Federal Reserve will hike interest rates to make the cost of borrowing more expensive.
Ultimately, the decision of whether or not to use the Higher Education Act to cancel student debt is a political one. The Biden administration will need to weigh the pros and cons of this plan before making a decision.