PENNSYLVANIA, USA — During his visit to Wisconsin on Monday, President Biden proposed a new student loan forgiveness plan that hopes to succeed where the old plan failed.
“His first plan was built on something called the Heroes Act of 2023 and was rejected by the Supreme Court as unconstitutional, essentially because it did not involve congressional approval,” said Jess Cornaggia, a professor of finance at Pennsylvania State University Smeal College of Business.
The president announced the new plan will be structured under the Higher Education Act to avoid similar legal pushbacks.
The plan could eliminate debt for nearly 30 million Americans if successful.
“From what I read about the plan, the idea is to target the people that have runaway student debt balances, you know, people who owe more on their loans than they originally took out,” Cornaggia said.
The plan would automatically cancel debt for anyone who qualifies, whether they applied for programs like saving for valuable education or not.
The president's plan is also expected to forgive debt for people experiencing financial hardships.
Cornaggia says the plan could empower students to pursue higher education.
“When the government floats a plan to cancel debt, then at the margin, that makes it more likely that a student would be willing to take out debt and go to college.”
In 2023, the United States Department of Education reported 1.8 million student loan borrowers living in Pennsylvania averaging $35,000 in debt.
According to department data, more than 100,000 borrowers in the state have experienced some relief from the administration’s policies.
“For those people, I would expect the state of Pennsylvania, central Pennsylvania particularly will see value in this plan,” Cornaggia said.
The president is expected to continue touting his new plan in key cities over the next few days.
FOX43 reached out to the state GOP for a statement on the president’s new plan but did not receive a response.