Iowa GOP cheers Biden's loss on student loan forgiveness that would've aided 264,000 Iowans

Iowa's Republican elected officials cheered a U.S. Supreme Court ruling Friday striking down President Joe Biden's plan to forgive student loan debt for millions of Americans, including more than 260,000 Iowans.

In a 6-3 ruling, the court ruled the Biden administration overstepped its power with the plan to forgive up to $10,000 in debt for borrowers earning less than $125,000, and up to $20,000 for Pell Grant recipients.

Nationwide, the plan would have forgiven $400 billion in student loans and wiped out the debts of 26 million Americans.

In Iowa, 264,000 people either applied for student loan relief or were deemed automatically eligible based on their income, the Biden administration said in January.

Biden said Friday "the fight is not over." In a speech Friday afternoon, he outlined new steps his administration would take to forgive student loan debt.

"I believe that the court’s decision to strike down our student debt relief plan is wrong," Biden said. "But I will stop at nothing to find other ways to deliver relief to hard-working middle-class families. My administration will continue to work to bring the promise of higher education to every American."

More: Supreme Court live updates: SCOTUS strikes down Biden plan to forgive student loan debt

Iowa Republicans praise US Supreme Court ruling

Gov. Kim Reynolds and Attorney General Brenna Bird sued Biden to stop the plan, joining a number of challenges by Republican-led states.

In a statement Friday, Bird said she sued "to protect Iowans' hard-earned money."

"Today’s Supreme Court win stops Biden’s illegal mass student debt cancellation and protects the 87% of Americans without student debt from having to foot a $400 billion bill," Bird said. "Americans who work hard to pay off their loans or decide not to go to college so they can start a family, join the military or go straight into the workforce after school shouldn’t have to pay for someone else’s loans."

Reynolds said in a statement that she was encouraged "to see the Supreme Court rein in President Biden's executive overreach."

"The Supreme Court’s decision affirms what Iowans have believed this entire time: The hard-working men and women of this country should not bear the burden of paying off others’ loans," Reynolds said.

U.S. Sen. Joni Ernst said the court "rightly ruled that President Biden's student loan socialism is illegal."

"His bailout forced Iowans who chose to go straight into the workforce or pay for their own education to foot the bill for others’ degrees, fanned the flames of inflation and added to our skyrocketing debt," Ernst said in a statement. "Today’s decision is a win for our economy and hardworking Iowans."

U.S. Sen. Chuck Grassley touted his own bills to address higher education costs, which would provide more education and transparency about student loans and create a standard financial aid form.

"Iowans in each of the 16 counties I visited this week told me they’re hurting from two years of record-high inflation — the last thing they needed was a half-trillion dollar check to pay off the Biden administration’s student loan transfer," Grassley said in a statement. "The reality of that plan is not only fiscally insane, it’s unconstitutional."

What will Biden do now to forgive student loan debt?

Biden said Friday afternoon his administration will take action to forgive student loan debt through the Higher Education Act of 1965 — a different legal authority than the law he cited when enacting the first debt forgiveness plan.

The Higher Education Act allows the U.S. secretary of education to modify, waive or compromise federal student loan debt under certain circumstances, Biden said.

"This new path is legally sound," Biden said. "It's going to take longer, but in my view it's the best path that remains to providing as many borrowers as possible with debt relief. I've directed my team to move as quickly as possible."

More: President Biden reveals new path for student loan forgiveness after SCOTUS defeat

Americans with student loan debt are expected to resume making monthly payments in October after a three year pause due to the COVID-19 pandemic.

Biden said his administration will institute what he called a temporary 12-month onramp repayment program. During that time, the Department of Education will not refer borrowers who miss payments to credit agencies, although payments will be due and interest will accrue on student loans during this period.

"If you can pay your monthly bills, you should," Biden said. "But if you cannot, if you miss payments, this onramp temporarily removes the threat of default or having your credit harmed, which can hurt borrowers for years to come."

How much student debt do Iowans owe?

In 2022, 57% of Iowa college graduates — including community college graduates — had some amount of student loan debt, according to an April report from Iowa College Aid.

At the state's regents institutions, about 55% of graduates had some debt.

The average amount of student loan debt for Iowa college graduates in 2022 was about $25,700, the report said.

But that amount varies by the type of school the student attends, according to the report. Graduates of private, nonprofit colleges had an average of $32,254 in debt last year, graduates of the regents universities averaged $28,526 in debt and community college graduates averaged $13,296 in debt.

The average student who graduated from an Iowa regent university with debt in 2021 owed $29,562 at Iowa State University, $28,841 at the University of Iowa and $24,593 at the University of Northern Iowa, according to the Board of Regents' 2023 annual Student Financial Aid Report.

Jeneane Beck, a spokesperson for the University of Iowa, encouraged students with debt to go to studentaid.gov to find more information.

"The university will continue to work hard to absorb higher operating costs to keep tuition affordable; advocate for federal increases in Pell Grant funding, which has not kept up with inflation; and attract donor support for financial aid, including the Forevermore Scholarship," Beck said in an email.

"The UI is also investing in programs intended to improve the university’s four-year graduation rate because graduating in four years is the single greatest way to reduce student or family debt."

Angie Hunt, a spokesperson for Iowa State, said the percentage of ISU students who graduate with debt has dropped from 68% to 57% over the last decade, and 43% of students graduate with no debt.

"The Supreme Court’s ruling will not change Iowa State’s commitment to a quality, affordable education and supporting students with financial aid packages and private scholarships — including $500 million raised through the Forever True, for Iowa State campaign — which reduce the need for borrowing," Hunt said in an email.

Pete Moris, a spokesperson for UNI, said the university is the most affordable public university in the state. He said UNI offered nearly $90 million in financial aid to 98% of first-year students in the 2021-22 school year.

More: Iowa, ISU and Northern Iowa are increasing tuition this fall. What it means for students:

The Board of Regents voted in June to raise tuition by 3.5% next year at the state's three public universities. That will take undergraduate base tuition for in-state residents to $9,016 at the University of Iowa, $8,982 at Iowa State University and $8,396 at the University of Northern Iowa.

Stephen Gruber-Miller covers the Iowa Statehouse and politics for the Register. He can be reached by email at sgrubermil@registermedia.com or by phone at 515-284-8169. Follow him on Twitter at @sgrubermiller.

This article originally appeared on Des Moines Register: How the SCOTUS student loan forgiveness ruling impacts Iowa students