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Tag: personal debt and bankruptcy

  • Biden cancels $72 million in student loan debt for borrowers who went to for-profit Ashford University | CNN Politics

    Biden cancels $72 million in student loan debt for borrowers who went to for-profit Ashford University | CNN Politics


    Washington
    CNN
     — 

    Even though President Joe Biden’s student loan forgiveness program was blocked by the Supreme Court earlier this year, his administration is moving forward with more targeted student debt cancellations allowed under existing programs.

    The Department of Education said Wednesday that it is canceling $72 million in federal student loan debt for more than 2,300 borrowers who attended the for-profit Ashford University in California.

    Altogether, the Biden administration has approved the cancellation of more than $116 billion of student loan debt for over 3.4 million people – about 1.1 million of whom are borrowers who were misled by a for-profit college and granted relief under a program known as borrower defense to repayment.

    This student debt forgiveness program has been in place for decades and allows people to apply for debt relief if they believe their college misled or defrauded them.

    “My administration won’t stand for colleges taking advantage of hardworking students and borrowers. As long as I am president, we will never stop fighting to deliver relief to borrowers who need it – like those who attended Ashford University,” Biden said in a statement.

    The Department of Education found that Ashford University made “numerous substantial misrepresentations” to borrowers between March 1, 2009, and April 30, 2020. The school is now known as the University of Arizona Global Campus.

    The Education Department’s review was based on evidence presented in court by the California Department of Justice during its successful lawsuit against the school and its parent company at the time, Zovio.

    The court ruled in favor of the state in March 2022, ordering a penalty of more than $22.37 million – which is the subject of an ongoing appeal.

    “As the California Department of Justice proved in court, Ashford relied extensively on high-pressure and deceptive recruiting tactics to lure students,” James Kvaal, the US under secretary of education, said in a press release.

    Borrowers whose debt relief applications have been approved due to this action can expect to receive an email in September. They will not have to make any payments on the loans being discharged when monthly payments resume in October after the expiration of the pandemic-related pause.

    Last year, Biden announced a plan to cancel up to $20,000 of federal student loan debt for low- and middle-income borrowers. The proposal would have forgiven roughly $420 billion for tens of millions of borrowers, but it was knocked down by the Supreme Court and never took effect.

    The Biden administration has been successful in other efforts to provide narrower student debt relief. Not only has it made it easier to apply for debt cancellation under the borrower defense program, but it also expanded eligibility for the Public Service Loan Forgiveness program, which wipes away outstanding debt for public sector workers after they make 10 years of qualifying payments.

    In August, the administration launched a new income-driven repayment plan, known as SAVE (Saving on a Valuable Education), that will reduce monthly payments and the amount paid back over time for eligible student loan borrowers.

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  • Biden administration seeks to remove medical bills from credit reports | CNN Politics

    Biden administration seeks to remove medical bills from credit reports | CNN Politics



    CNN
     — 

    Millions of Americans with unpaid medical bills would no longer have that debt show up on credit reports under proposals being considered by the Consumer Financial Protection Bureau.

    The agency, which is soliciting feedback from small businesses that may be affected, expects to issue a proposed rule next year, the bureau said Thursday.

    If the rule is finalized, consumer credit companies would be barred from including medical debt and collection information on reports that creditors use to make underwriting decisions.

    Creditors would only be able consider non-medical information when evaluating borrowers’ loan applications. And debt collectors would no longer be able to use the listing of medical debt on credit reports as leverage to pressure consumers into paying questionable bills, the bureau said.

    “Research shows that medical bills have little predictive value in credit decisions, yet tens of millions of American households are dealing with medical debt on their credit reports,” said CFPB Director Rohit Chopra. “When someone gets sick, they should be able to focus on getting better, rather than fighting debt collectors trying to extort them into paying bills they may not even owe.”

    Roughly 20% of Americans reported having medical debt, according to a 2022 report from the bureau. But Chopra stressed that many health care bills contain mistakes.

    “Families are often barraged with a string of confusing and error-ridden bills, and too many of us have ended up in a doom loop of disputes between insurance companies and health care providers,” he said. “These bills, even ones where the patient doesn’t owe anything further, can end up being reported on the patient’s credit report.”

    The proposals under consideration are the latest step in the bureau’s efforts to curb the impact of medical debt on consumers. CFPB and other agencies are also looking into medical billing practices, including costly products such as medical credit cards and installment loans.

    The White House has also sought to help lessen Americans’ medical debt burden as part of its effort to help people contend with inflation and higher costs of living. Last year, it laid out a four-point plan to help protect consumers, including having the bureau investigate credit reporting companies and debt collectors that violate patients’ and families’ rights.

    Medical debt has lowered people’s credit scores, which affects their ability to buy a home, get a mortgage or own a small business, Vice President Kamala Harris said in a call with reporters on Thursday.

    “We know credit scores determine whether a person can have economic health and well-being, much less the ability to grow their wealth,” she said. “Today, we are offering a solution to fix this problem … Together, these measures will improve the credit scores of millions of Americans so that they will better be able to invest in their future.”

    Also last year, the three largest credit reporting agencies – Equifax, Experian and TransUnion – announced they would remove nearly 70% of medical debt from consumer credit reports.

    The agencies no longer include medical debt that went to collections on consumer credit reports once it has been paid off. That eliminated billions of dollars of debt on consumer records.

    In addition, unpaid medical collection debt no longer appears on credit reports for the first year, whereas the previous grace period was six months. That gives people more time to work with their health insurers or providers to address the bills. And medical collection debt of less than $500 is no longer included on credit reports.

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  • Gen Z and Millennials are scrimping. Boomers? Living it up | CNN Business

    Gen Z and Millennials are scrimping. Boomers? Living it up | CNN Business


    New York
    CNN Business
     — 

    Baby Boomers are living it up, splurging on cruises and restaurants. Younger Americans are struggling just to keep up.

    Bank of America internal data shows a “significant gap” in spending has opened recently between older and younger generations.

    While Baby Boomers and even Traditionalists (born 1928-1945) are ramping up spending, Gen X, Gen Z and Millennials are cutting back as they grapple with high housing costs and looming student debt payments.

    “It’s fairly unusual,” David Tinsley, senior economist at the Bank of America Institute, told CNN in a phone interview.

    Overall, household spending dipped 0.2% year-over-year in May, according to the bank’s card data — but the generational breakdown showed a more varied picture.

    Spending increased by 5.3% for Traditionalists and 2.2% for Baby Boomers. In contrast, spending fell by about 1.5% for younger generations.

    If not for the aggressive spending by Boomers, Tinsley said, overall consumer spending would have been even more negative.

    So, what is going on?

    Older Americans are ramping up spending as they benefit from a spike in Social Security payments.

    Starting in January, Social Security recipients received an 8.7% cost-of-living adjustment, the biggest increase since 1981. That increase — caused directly by high inflation — is boosting the average retirees’ monthly payments by an estimated $146.

    Bank of America spending data shows a noticeable bump in spending by households that received the cost-of-living boost.

    However, the bank noticed the spending surge by older Americans is happening among high-income households too. And those consumers are less likely to be impacted by the spike in Social Security payments.

    “That can’t be the whole story,” Tinsley said of the cost-of-living adjustments.

    To explain the drop in spending by younger Americans, Bank of America pointed to high housing costs. In recent years, rental rates spiked, home prices soared and mortgage rates surged.

    Younger Americans are also much more likely to move than older ones.

    “The people who do move are really facing quite significant cost increases,” said Tinsley.

    Bank of America has noted that older consumers are spending on travel, including hotels, airfare and cruises, now that the Covid emergency is over.

    Due to Covid fears, older generations held back on travel during the pandemic, but now they are “splurging,” Tinsley said.

    Beyond the high cost of living, Bank of America said many younger Americans are also likely bracing for the return of a significant monthly expense: student debt.

    The bipartisan debt ceiling deal included a provision that specifically prevented the Biden administration from extending the pause on federal student loan payments.

    The student debt freeze, in effect since March 2020 when the Covid pandemic erupted, is expected to conclude by the end of August.

    That is particularly painful to younger consumers. Americans are sitting on $1.6 trillion of student debt, according to the New York Federal Reserve, and the vast majority of that student debt is held by those under the age of 49.

    For millions of Gen Z and Millennials, the return of student debt payments will mean less money for spending on restaurants and vacations.

    Some consumers may be starting to pull back on spending ahead of that change, Tinsley said: “It’s coming down the tracks pretty fast now.”

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  • McCarthy leans on ‘five families’ as House GOP plots debt-limit tactics | CNN Politics

    McCarthy leans on ‘five families’ as House GOP plots debt-limit tactics | CNN Politics



    CNN
     — 

    The White House and Senate Democrats have calculated that Speaker Kevin McCarthy won’t have enough votes to raise the national borrowing limit and will end up caving to their demands to avoid a first-ever debt default – with no strings attached or any conditions whatsoever.

    House Republicans are trying to prove them wrong.

    Behind the scenes, McCarthy is beginning to chart out a new strategy to ensure the House GOP can muster 218 votes to raise the national debt ceiling and tie that to an array of cuts to federal spending, as the standoff with the White House shows no signs of easing.

    In the speaker’s office last week, leaders of the so-called “five families” of the House GOP – representing the various ideological wings of the conference – met for the first time to discuss the range of possibilities and to kick around ideas about raising the debt limit, according to multiple attendees. McCarthy didn’t attend the session but enlisted a close confidant, Louisiana Rep. Garret Graves, to lead the discussions, with top committee chairmen and other members of leadership also participating. Talks are expected to pick up when the House returns from a two-week recess after the Presidents Day holiday.

    The goal, according to multiple Republicans, is to begin to develop a consensus about a proposal that can pass the House with GOP votes and strengthen their conference’s negotiating position as Washington stares into a looming debt default this summer. The belief among Republicans is such a plan would force the White House and Senate Democrats to back off their insistence that they will only accept a “clean” debt ceiling increase without any spending cuts attached.

    The move gives a window into McCarthy’s management of his razor-thin majority, allowing his most conservative members to try to find consensus with more moderate lawmakers – replicating a dynamic that ultimately allowed him to win the speakership after a messy, 15-ballot fight. But it also is a break to how one of his predecessors, John Boehner, dealt with the debt limit the last-time the country nearly defaulted – in 2011 when many of the decisions were made by the leadership, prompting a revolt among the rank-and-file.

    The private GOP talks have been positive so far, attendees said, even as they acknowledged they are in the very early stages, weighing a range of potential budget cuts and not nearing any agreement yet.

    Rep. Patrick McHenry, the North Carolina Republican who chairs the House Financial Services Committee, said the meeting amounted to a “healthy discussion” that showed “goodwill” in an effort “to come up with an approach that unifies Republicans and enables us to unlock the rest of the legislative year.”

    “That’s the purpose of the conversation: How do you move the debt limit out of the House of Representatives?” McHenry told CNN.

    The discussions are expected to run parallel to talks between McCarthy and President Joe Biden, with the speaker making clear he believes the next step will be to continue discussions with Biden. The group could potentially help McCarthy present a GOP proposal to the president in future conversations and help vet any White House offer.

    But despite both Biden and McCarthy sounding positive after their first face-to-face encounter earlier this month, there’s been little tangible progress toward finding a deal as Democrats continue to hold firm to their demands to raise the borrowing limit with no horse-trading with Republicans.

    Republicans believe that the White House is slow-rolling Biden’s discussions with the speaker in order to ratchet up pressure to pass a clean debt ceiling increase, something McCarthy has publicly and privately rejected.

    “They say they don’t want to put the economy in jeopardy,” McCarthy told CNN when asked about the lack of progress with Biden since the last White House meeting. “I think that would be the wrong approach.”

    Behind the scenes, McCarthy has been proactive in ensuring regular communication between the five families, a nickname from the “The Godfather” of warring New York mob families who tried to maintain the peace.

    “There’s a level of trust and engagement within the five families that I have not seen in the previous four years,” said South Dakota Rep. Dusty Johnson, chairman of the Main Street Caucus, a center-right group. “We’re working really well together.”

    Rep. Dave Joyce of Ohio, who leads the pragmatic-minded Republican Governance Group, said the group meeting with Graves was “very productive, and we will continue to have those until we come up with something.”

    Another reason Republicans are eager to outline their vision: Democrats have hammered them for not having a plan – and have tried to speak for them. Indeed, perhaps the most memorable moment of Biden’s State of the Union address was when the president suggested Republicans want to cut Social Security and Medicare, eliciting jeers and boos from GOP lawmakers in the audience.

    “It’s intellectually dishonest,” Joyce said, noting that McCarthy has said repeatedly that Medicare and Social Security cuts are off the table.

    Some Democrats have speculated that they could peel off at least six House Republicans to back a so-called discharge petition – a lengthy process that forces a bill to the floor if 218 lawmakers sign on – once they get closer to a debt default and still don’t have a resolution.

    But moderate Republicans are ruling out using the discharge petition for a clean debt ceiling hike and are insisting on extracting spending cuts in exchange for raising the nation’s borrowing limit – a sign that the conference is in lockstep with McCarthy’s negotiating strategy.

    “If it’s tied to a clean debt ceiling, I wouldn’t do that,” said Rep. Don Bacon, who represents a Biden-won district in Nebraska. “The President’s got to give us some compromise.”

    The hardline House Freedom Caucus, which ended up forcing McCarthy to make key concessions to win the speakership, is one of the five groups taking part in the debt ceiling talks.

    Rep. Scott Perry, a Pennsylvania Republican who chairs the group and attended the five families meeting, said there’s a consensus on this point: “We’re not going to accept ‘no negotiation,’” a reference to the White House’s position. “And there’s not going to be a clean debt ceiling, alright?”

    South Carolina Rep. Ralph Norman, also a member of the hardline group, agreed.

    “We got to get 218,” he said of the early talks. “We’re trying to get the framework. We want all buy in.”

    Norman argued that it didn’t make sense for the groups to publicly float competing proposals, even though one of the so-called families, the Republican Study Committee, has outlined its preferred approach, although the group did not lay out specific cuts or spending proposals.

    “There’s no sense in us, one group putting something out, another group puts something out,” Norman said.

    Norman, who initially opposed McCarthy’s speakership bid but ultimately backed him, said the California Republican’s effort to build consensus has helped his standing within the conference.

    “To his credit, Kevin has done a good job of getting us all together and getting us on the same page,” Norman said.

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  • GOP-led states press Supreme Court to keep Biden student debt forgiveness on hold | CNN Politics

    GOP-led states press Supreme Court to keep Biden student debt forgiveness on hold | CNN Politics



    CNN
     — 

    A collection of Republican-led states argued on Wednesday that the Supreme Court should keep President Joe Biden’s student debt forgiveness policy on hold while the litigation around it plays out, pointing to fact that the Biden administration has extended its pause on student loan payments.

    The Republican states, which have already obtained an appeals court order blocking the implementation of the controversial program, said the extension showed that there would be no harm inflicted by the court order being left in place.

    “The Department [of Education] can point to no emergency or imminent harm because, just yesterday, the agency extended the payment pause on student loans until the summer of 2023,” they wrote in the new filing.

    Federal student loan payments were set to resume in January after a years-long pandemic pause. But the Biden administration said Tuesday that it is extending the pause until 60 days after the pending litigation over the forgiveness program is resolved. If the program has not been implemented and the litigation has not been resolved by June 30, payments will resume 60 days after that.

    The Wednesday filing by the states came in response to a request from the Biden administration that the Supreme Court lift the hold that has been placed on the student debt relief program, which would forgive up to $20,000 in loans for individual borrowers who earned less than $125,000 in either 2020 or 2021.

    The Republican states accused the Biden administration of relying “on the COVID-19 pandemic” as “a pretext to mask the President’s true goal of fulfilling his campaign promise to erase student-loan debt.”

    The policy was set to begin going into effect earlier this fall, but was blocked by the 8th US Circuit Court of Appeals in a lawsuit brought by Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina.

    They claim that in rolling out the program, Department of Education Secretary Miguel Cardona went beyond the authority he has under law to cancel individual debts. They also argue that the department violated administrative law in how it launched the policy.

    The states defended the appeals court order blocking the relief program, telling the Supreme Court on Wednesday that they will suffer the types of harm that make it appropriate for a court to intervene.

    This procedural threshold – known as standing – has been a legal obstacle for many opponents of the program who have tried to block it in court, including challengers whose requests for Supreme Court intervention were previously denied. The states in the new filing argue that they’ll suffer a loss of tax revenue and other kinds of injuries if the debt relief program goes into effect.

    The states also pointed to the ruling from a federal judge in Texas in a separate case that struck down the student debt relief policy, which the administration has appealed to the 5th US Circuit Court of Appeals. That ruling will remain in effect even if the Supreme Court lifts the hold placed by the 8th Circuit, the states noted in their filing Wednesday.

    The Biden administration has indicated it will take that case to the Supreme Court as well if the 5th Circuit leaves in place the ruling striking it down.

    In the request it put before the Supreme Court, US Solicitor General Elizabeth Prelogar argued that leaving the program on hold “leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations.”

    Prelogar told the Supreme Court that the program was a lawful endeavor “to ensure that borrowers affected by a national emergency are not worse off in relation to their student loans.”

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  • Judge dismisses GOP states’ challenge to Biden student debt relief program | CNN Politics

    Judge dismisses GOP states’ challenge to Biden student debt relief program | CNN Politics


    Washington
    CNN
     — 

    A federal judge rejected a lawsuit brought by six Republican-led states challenging President Joe Biden’s student debt relief program.

    US District Judge Henry Edward Autrey said Thursday he was dismissing the case because the states had not overcome the procedural threshold known as standing, which requires that plaintiffs show that a policy is causing them direct and traceable harm.

    Student loan cancellations, worth up to $20,000 per eligible borrower, could begin on Sunday.

    The states are expected to appeal the judge’s ruling, sending the case to the 8th Circuit Court of Appeals, where it is likely to face a panel of conservative judges.

    The lawsuit was filed in a federal court in Missouri last month by state attorneys general from Missouri, Arkansas, Kansas, Nebraska and South Carolina, as well as legal representatives from Iowa.

    The states had argued in court documents that the Biden administration does not have the legal authority to grant broad student loan forgiveness, as well as that the program would hurt them financially.

    Lawyers for the government have argued that Congress gave the education secretary the power to discharge debt in a 2003 law known as the HEROES Act. They also argue that the plaintiffs don’t have standing to ask for an injunction.

    In another victory for Biden, Supreme Court Justice Amy Coney Barrett rejected a separate challenge to the administration’s student loan forgiveness program on Thursday, declining to take up an appeal brought by a Wisconsin taxpayers group.

    The Biden administration faces other lawsuits from Arizona Republican Attorney General Mark Brnovich, and conservative groups such as the Job Creators Network Foundation and the Cato Institute.

    But the legal challenge filed by six states that was dismissed Thursday was widely seen as the most formidable. It was the “most plausible legal challenge to the Biden Jubilee,” said Luke Herrine, an assistant law professor at the University of Alabama who previously worked on a legal strategy pushing for student debt cancellation, in a tweet Thursday.

    Biden’s student loan forgiveness program, first announced in August, aims to deliver debt relief to millions of borrowers before federal student loan payments resume in January after a nearly three-year, pandemic-related pause.

    While the application officially opened on Monday, the Biden administration has agreed in court documents to hold off on canceling any debt until October 23. Once processing begins, most qualifying borrowers are expected to receive debt relief within weeks.

    Under Biden’s plan, eligible individual borrowers who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 annually in those years will see up to $10,000 of their federal student loan debt forgiven.

    If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness.

    This story has been updated with additional information.

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  • The Supreme Court just handed Joe Biden a series of setbacks. It may have also given Democrats new motivation to reelect him | CNN Politics

    The Supreme Court just handed Joe Biden a series of setbacks. It may have also given Democrats new motivation to reelect him | CNN Politics



    CNN
     — 

    President Joe Biden wasn’t planning to take questions on Thursday. His helicopter was waiting outside on the White House’s South Lawn.

    But after a 10-minute statement on the Supreme Court’s affirmative action ruling, a CNN reporter called out, “Is this a rogue court?” The president stopped in his tracks.

    Pausing to think a moment, he looked over his shoulder. “This is not a normal court,” he said before leaving.

    This week’s monumental rulings – striking down affirmative action in college admissions and unraveling Biden’s student debt relief plan among them – amount to serious setbacks for a president who promised as a candidate to advance racial equity and erase student debt.

    They are also an urgent reminder to Democrats of the enduring consequences of elections at a moment Biden’s advisers are searching for ways to inject enthusiasm into his bid for another term.

    What impact that will have on the coming election remains unknown. But Biden and his team have already begun assigning blame on Republicans for dismantling programs that have benefited young, college-educated and minority voters – all critical components of the Democratic coalition Biden will need to mobilize if he hopes to win reelection.

    That three justices within the court’s conservative majority were appointed by President Donald Trump – both Biden’s predecessor and, according to polls, his most likely opponent next year – creates even more of an impetus for Biden to use the rulings as a political cudgel as his campaign heats up.

    “The excesses of the Supreme Court are going to backfire,” said Rep. Ritchie Torres, a New York Democrat. “You know, the Supreme Court’s decision to overturn Roe versus Wade reduced what was supposed to be a red wave in the 2022 election cycle to nothing more than a red trickle. So not only is the Supreme Court’s decision bad law, it’s also bad politics and it’s going to come back to haunt the Republican Party.”

    Speaking to a group of Democratic donors in New York City on Thursday evening, Biden sought to underscore the stakes of the court’s new supermajority, a preview of how he’ll frame the issue over the coming year.

    “The Supreme Court is becoming not just conservative, but almost – it’s like a throwback. It’s like a throwback, some of the decisions they’re making,” Biden told donors in a private dining room inside the Seagram Building. “Did you ever think we’d be in a position, after 50 years of acknowledging the right of privacy in the Constitution, suggesting that there’s no such thing as the right to privacy?”

    Despite his criticism of the court, Biden has rejected some liberal suggestions on reforming the panel. He opposes expanding the number of justices that sit on the court and hasn’t embraced term limits.

    “If we start the process of trying to expand the court, we’re going to politicize it, maybe forever, in a way that is not healthy,” Biden said during a friendly interview on MSNBC shortly after Thursday’s decision on affirmative action.

    Biden’s student loan plan, which came about last year after months of agonizing internal debate over its costs and eligibility criteria, was intended to free low- and middle-income Americans from crippling debt.

    Throughout the process, Biden expressed concern at being seen as offering a handout to the wealthy. Eventually, pressure to fulfill one of his top campaign promises led to the plan to forgive up to $20,000 in student loan debt for certain borrowers.

    For months the White House publicly said there was no alternative plan if the Supreme Court struck down the student debt relief program. But behind the scenes, top White House officials were working for several weeks to fulfill a simple directive from the president to “be ready in the event the Supreme Court did not do the right thing,” White House officials said.

    The president’s charge to his team was described as this: “If the court ruled against the program, find other ways to deliver relief for as many working and middle-class borrowers as possible, accounting for all the legal issues.”

    For the past few weeks, White House chief of staff Jeff Zients gathered his team for weekly meetings to map out all scenarios for the Supreme Court’s ruling and explore all legal avenues available to them after the president told his team to build a “fully developed response” to all possible rulings, officials said.

    Zient’s office – led by deputy chief of staff Natalie Quillian, the Domestic Policy Council, National Economic Council and White House Counsel’s Office – worked with the Department of Education and the Department of Justice to come up with options the administration could take if the ruling was not in their favor.

    “All of these meetings were structured around one question – how would we be able to deliver relief to as many borrowers as we could, as quickly as possible under any possible outcome of the Supreme Court,” official said.

    The White House also stayed in touch with and fielded suggestions for next steps from debt relief advocate groups and congressional allies throughout the process. Lawyers from the White House, Justice Department and Education Department examined all of the recommendations, including administration action and the legal authorities available to the administration, and ultimately crafted responses for multiple scenarios.

    Inside the White House, some officials had held out hope the court would uphold Biden’s student debt program, pointing to some surprising decisions over the past weeks that saw some conservative justices joining liberals on issues of voting rights and congressional redistricting.

    But even Biden acknowledged after the court’s oral arguments in February he wasn’t certain the ruling would go his way.

    “I’m confident we’re on the right side of the law,” Biden told CNN in March when asked if he was confident the administration would prevail in the case. “I’m not confident of the outcome of the decision yet.”

    His instinct was correct. The president was in the Oval Office on Friday morning when he was informed of the Supreme Court’s decision by his senior aides and then engaged in meetings stretching into the afternoon to fine-tune their response after the ruling was not in their favor.

    Ultimately, the president directed his team to move forward with a new plan, which includes pursuing a new path for debt relief through the authorities in the Higher Education Act of 1965, which was promoted by some debt relief advocate groups and progressive lawmakers, as well as creating a temporary 12-month “on-ramp repayment” program for federal student loan borrowers when payments resume in October.

    A day earlier, Biden was watching the news on television when the affirmative action decision was handed down by the court, according to an official. A team from the White House counsel’s office came to brief him on the ruling.

    “In our conversations with the White House about why student debt cancelation was needed, it’s about reducing the racial wealth gap,” said Wisdom Cole, national director of the Youth & College division at the NAACP. “If the administration is committed to diversity, equity, and inclusion, they must use every tool in their toolkit. Every legal authority to ensure that we see relief happen.”

    Demonstrating urgency in responding to the court’s actions was a key objective as the White House prepared for both rulings, according to people familiar with the matter.

    Looming over the preparations was the impression left after last year’s Supreme Court term that the Biden administration was unprepared for the decision striking down the nationwide right to abortion, despite a leaked court opinion months ahead of time indicating the justices were prepared to overturn Roe v. Wade.

    The White House has strongly denied it was caught flat-footed on abortion and has pointed to actions taken in the months after the decision to expand access, including to medication abortion.

    The issue proved galvanizing to Democratic voters in November’s midterm elections and has propelled Democratic victories even in traditionally Republican districts.

    Whether the court’s ruling on student debt relief and affirmative action can have a similar effect will prove critical over the coming year, as Biden works to convince voters he is still fighting to fulfill his promises. Initial reaction from progressive Democrats was positive.

    “It was not a foregone conclusion that the President would act so swiftly today. But he announced an alternative path to student debt cancellation by using his Higher Education Act authority given by Congress – and that deserves praise,” said Adam Green, co-founder of the Progressive Change Institute.

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