President Biden on Monday announced a large-scale effort to help pay off federal student loans for tens of millions of American borrowers, seeking an election-year boost by returning to a 2020 campaign promise that was blocked by the Supreme Court last year.
Mr. Biden’s new plan would reduce the amount that 25 million borrowers still owe on their undergraduate and graduate loans. It would wipe away the entire amount for more than four million Americans. Altogether, White House officials said, 10 million borrowers would see debt relief of $5,000 or more.
“While a college degree still is a ticket to the middle class, that ticket is becoming much too expensive,” Mr. Biden said during a speech to a small but enthusiastic audience filled with supporters. “Today, too many Americans, especially young people, are saddled with too much debt.”
Mr. Biden announced the plan in Madison, Wis., the capital of a critical swing state and a college town that symbolizes the president’s promise to make higher-education affordability a cornerstone of his economic agenda.
But it is a promise he has so far failed to achieve, largely because of legal challenges from Republicans and other critics. They accuse Mr. Biden of unlawfully using his executive authority to enact a costly transfer of wealth from taxpayers who have not taken out federal student loans to those who have.
Officials did not say how much the new plan would cost in coming years, but critics have said it could increase inflation and add to the federal debt by billions of dollars.
Mr. Biden said his new effort would help the economy by removing the drag of enormous debt from people who would otherwise not be able to buy a home or pursue a more economically sound future.
“We’re giving people a chance to make it,” Mr. Biden said. “Not a guarantee. Just a chance to make it.”
Mr. Biden’s announcement was a presidential do-over. In the summer of 2022, he put in motion a plan to wipe out $400 billion in student debt for about 43 million borrowers. That was blocked by the Supreme Court, which said he exceeded his authority. In the months since, Mr. Biden has waived small amounts of debt using existing programs. But now he is attempting a larger effort closer to the scale of his first try.
The original plan relied on a law called the HEROES Act, which the administration argued allowed the government to waive student debt during a national emergency like the Covid pandemic. The justices disagreed after Republican attorneys general and others challenged the debt waiver plan.
The new approach is different.
For months, Mr. Biden’s Education Department has been developing regulations using a long process authorized by the Higher Education Act. Instead of an across-the-board waiver of debt, the new approach targets five groups of borrowers: those whose loans have ballooned because of interest; borrowers who have been paying for decades; those who have economic hardship; people who qualify for existing debt relief programs but have not applied; and people whose loans come from schools that have since been denied certification or have lost eligibility for federal student aid programs.
Administration officials said because the new approach is based on a different law, it is more likely to survive the expected challenges. They said lawyers for the White House and the Education Department have studied the Supreme Court ruling and have designed the new program to make sure it does not violate the principles laid out by the justices.
But lawyers for those who oppose the approach are likely to argue that waiving the debt is unfair to those who already paid back their loans or never took out college loans in the first place. That argument helped sway the justices in the last case.
Neal McCluskey, the director of the Center for Educational Freedom at the Cato Institute, called the new plan “dangerous policy” that is unfair to taxpayers and would cause colleges and universities to raise their prices.
“The Constitution gives Congress, not the president, the authority to enact law, and the Supreme Court has already struck down a unilateral, mass student debt cancellation scheme by the Biden administration,” he said. “It would stick taxpayers with bills for debts other people chose for their own financial advancement.”
The legal challenges will likely take months to resolve, and that could leave the debt relief plan in limbo as voters go to the polls in November to choose between Mr. Biden and former President Donald J. Trump.
Members of Mr. Biden’s administration fanned out across the country on Monday to talk about the new plan, betting that it will rally support among voters who were disappointed that the court blocked the first one, which would have eliminated up to $20,000 in debt for tens of millions of borrowers. Vice President Kamala Harris held a round-table discussion in Philadelphia. Miguel Cardona, the secretary of education, spoke in New York City.
But beyond the threat of legal action, the president faces steep obstacles just because of the calendar. The new plan has not yet been published in the Federal Register, which will kick off a required, monthslong public comment period before it can take effect. Officials said on Sunday only that they hoped some of the provisions would begin going into effect in “early fall” of this year.
Administration officials hope that the president’s supporters will give him credit for trying, even if many of the borrowers do not end up seeing any relief before they go to the ballot box.
Senator Chuck Schumer, Democrat of New York and the majority leader, said the president’s announcement highlights the difference between Republicans and Democrats when it comes to the issue of economic support for those who are struggling the most.
“After the MAGA Supreme Court struck down the most far-reaching student loan debt forgiveness last year and ripped away a financial lifeline from those who need it most, this new action by President Biden shows Democrats are committed fixing the federal student loan program so that higher education can finally be a ticket to the middle class for everyone,” he said in a statement.
White House officials have been scrambling for months to respond to the anger about student loans among the president’s base. In one poll released last month, more than 70 percent of young people said the issue of student loan forgiveness was “important” or “very important” to them as they make their decision in the 2024 election campaign.
Officials said the five groups of people targeted in the new plan will address most of the egregious issues that some borrowers have with their student loans.
People whose loans have grown beyond the amount they originally borrowed because of interest would have up to $20,000 of that interest wiped away, leaving them to repay only the amount they originally borrowed. People making less than $120,000 a year, or couples making less than $240,000, would qualify to have all of their interest forgiven.
Officials said that 23 million people would most likely have all of their interest-related balances waived from that provision.
About two million borrowers who already qualify to have their student loans waived under existing programs have not applied for relief. Under the new rules, the Education Department would be authorized to cancel the debt for those people without their having to apply.
People who took out federal student loans for undergraduate degrees and began repaying them more than 20 years ago would automatically have the debt canceled under the new plan. Graduate students who borrowed money and began repaying 25 years ago would have their debt canceled.
Officials said that about 2.5 million people would qualify under that rule.
People who borrowed money to attend colleges that have since lost their certification or their eligibility to participate in the federal student aid program would have their debt canceled. Officials did not say how many people that would affect. And people who are especially burdened with other expenses — such as high medical debt or child care — could apply to have their student loans forgiven.
Officials did not estimate how many people might qualify for what they called the “hardship” programs.
