President Biden’s New Student Debt Forgiveness Plan: Everything We Know

• The Supreme Court struck down President Joe Biden's original student loan forgiveness plan in June 2023.
• Biden announced shortly after that he will pursue debt cancellation through negotiated rulemaking.
• That process began in early October.
• The pause on federal student loan payments, meanwhile, ended in August 2023.

President Joe Biden is moving forward with his plan to cancel federal student loan debt, but this time through other means.

The U.S. Supreme Court ruled in June that Biden's previous debt forgiveness plan — which relied on the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act) — was unlawful. To circumvent this issue, the president is now pursuing debt forgiveness using powers granted through the Higher Education Act (HEA).

"The president remains committed to providing relief to low- and middle-income borrowers," read a White House statement. "For too many Americans, a ticket to the middle class remains out of reach because of unmanageable student loan debt."

The plan is in its middle stages, but here's what we know so far.

Biden Proposes Forgiveness Through Formal Rulemaking

Biden plans to pursue debt forgiveness through a process known as negotiated rulemaking.

Negotiated rulemaking allows federal agencies, including the Department of Education (ED), to change existing regulations. The department must set an agenda, choose representatives from various groups that would be impacted by the change, and gather for months of discussions in an effort to reach a consensus on a final rule.

The Biden administration has used this process to create a new income-driven repayment (IDR) plan, change the Public Service Loan Forgiveness (PSLF) program, and reinstate a gainful employment rule.

Sixteen negotiators, plus alternates, met with the department in October, November, December, and February to flesh out ED's draft proposals for debt forgiveness. The committee was only scheduled to meet for three sessions but added February negotiations to widen relief to "borrowers experiencing hardship."

ED and negotiators failed to reach a consensus on most of the department’s proposals but did reach a consensus on relief for borrowers experiencing hardship.

Still, negotiated rulemaking showed that ED plans to offer debt forgiveness to the following groups of borrowers:

• Borrowers who first entered repayment 25 years ago
• Borrowers whose current balance is more than the original amount they borrowed
• Borrowers who attended a career-training program that led to unreasonably high debt or "unacceptably high" loan default rates
• Borrowers who would have qualified for forgiveness under another forgiveness program, like PSLF, or a repayment plan but never applied
• Borrowers "experiencing hardship"

How Long Will This Process Take?

Negotiated rulemaking, while more likely to withstand legal scrutiny, is a lengthy process.

ED recently wrapped up the first major hurdle when it finished its final rulemaking session with negotiators in late February.

The Student Loan Relief Committee and ED failed to reach a consensus on six issues, but they did reach a consensus on five of the 11 total regulatory proposals.

The department published the majority of its proposals in the Federal Register on April 17 and left 30 days for public comment, meaning people have until May 17 to leave their thoughts and suggestions. ED’s proposal did not include regulatory language to benefit "borrowers experiencing hardship," and promised to publish a separate proposal for those borrowers at a later date.

ED generally does not change any language that was agreed upon during negotiations.

BestColleges reported that a debt forgiveness plan could be implemented as soon as June 2024, or as late as October 2024.

An April report from Politico stated that ED hopes to finalize the program by fall 2024.

Forgiveness Amount Unknown

It is still unknown how much debt the federal government may decide to cancel through Biden's Plan B forgiveness plan.

Many advocates initially anticipated that the Biden administration would put forth a proposal mirroring the previous debt forgiveness plan. That plan would have erased up to $10,000 in federal student loans for all borrowers making less than $125,000 per year, or couples making less than a combined $250,000. People who received at least one Pell Grant while in college were eligible for up to $20,000 in total loan forgiveness.

Formal rulemaking showed that this would not be the case.

ED later revealed that if Biden’s Plan B for student loan relief goes into effect, it will benefit approximately 30 million federal student loan borrowers.

Biden’s plan would fully eliminate accrued interest for 23 million borrowers, according to the department. It would erase all remaining federal student loan debt for over 4 million borrowers and provide debt relief of at least $5,000 to more than 10 million borrowers.

In the case of borrowers "experiencing hardship," the department stated that it would only grant loan forgiveness to borrowers ED determines to have an 80% chance or more to default on their federal student loans within the next two years.

That includes Parent PLUS borrowers.

Rulemaking Gives Debt Forgiveness a Better Chance in Court

Biden's initial plan for federal student loan debt forgiveness ultimately failed in the U.S. Supreme Court because it relied on the HEROES Act.

Chief Justice John Roberts, writing for the majority opinion, said the HEROES Act gives ED the power to "waive or modify" existing regulations, but not rewrite the system from the ground up. He said the department could only make "modest adjustments" to the student loan system through this act.

"The [loan cancellation] plan has 'modified' the cited provisions only in the same sense that 'the French Revolution "modified" the status of the French nobility' — it has abolished them and supplanted them with a new regime entirely," Roberts wrote.

Negotiated rulemaking, meanwhile, offers government agencies much broader powers to rewrite regulations.

A Congressional Research Service report from 2017 outlined that while rulemaking is still subject to judicial review, negotiated rulemaking may make it harder for a court to overturn these regulatory changes. According to the report, changes made through rulemaking are more likely to survive judicial review if the agency can prove that it examined all relevant data and laid out an articulate explanation for any regulatory changes.

"Fundamentally, the … standard requires only that an agency demonstrate that it engaged in reasoned decisionmaking by providing an adequate explanation for its decision," the report states.

The Legal Services Center of Harvard Law School wrote in September 2020 that the secretary of education has the authority to cancel debt under the HEA.

Still, that's not to say that the president's rule will skate through unchallenged.

The Congressional Review Service report added that the Administrative Procedure Act makes proposals vulnerable to judicial review if the agency seeks to make changes that Congress did not intend for it to consider.

"The Supreme Court has stated that 'an administrative agency's power to regulate in the public interest must always be grounded in a valid grant of authority from Congress,'" the report states. "Courts grant varying levels of deference to agency interpretations of statutes when examining questions such as whether an agency's action exceeds its congressionally delegated statutory authority."

Much like Biden's previous debt forgiveness plan, this new plan will almost certainly be challenged in court.