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

• The Supreme Court struck down President Biden's original student loan forgiveness plan June 30.
• Biden announced shortly after that he will pursue debt cancellation through negotiated rulemaking.
• That process isn't expected to start until this fall.
• The pause on federal student loan payments, meanwhile, will end Aug. 29.

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 on June 30 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 will instead pursue debt forgiveness using powers granted through the Higher Education Act (HEA), he announced later that afternoon.

"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 early 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 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.

ED declared intent to establish a negotiated rulemaking committee on June 30.

The department held a public hearing on July 18 to hear suggestions to determine what items will be on the agenda for this committee. A common sentiment among borrowers and advocacy groups during the hearing was that the department’s alternative debt forgiveness plan should mirror ED’s initial plan that would forgive between $10,000-$20,000 for most student loan borrowers.

ED called for nominations to the rulemaking committee on Aug. 31. The department said it would stop accepting nominations after Sept. 14.

Fourteen negotiators, plus alternates, will participate in negotiations with the department.

How Long Will This Process Take?

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

President Biden announced he plans to convene the committee for its first negotiated rulemaking sessions this fall. Historically, those sessions extend over three months, with the committee meeting one week per month.

ED's last negotiated rulemaking process stretched from January to March 2022.

Once that process is complete, rules don't immediately go into effect. The department must publish any proposal in the Federal Register so that the public can view and comment on any proposal. Public comment usually lasts 90 days, but the department has shortened this timeline to 30 days for past revisions.

A White House statement said that while ED plans to begin rulemaking sessions this fall, the department only promises to "complete this rulemaking as quickly as possible."

Bharat Ramamurti, deputy director for the National Economic Council, declined to give a specific timeline during a White House press briefing.

“It’s going to be months,” he said. “I think, as I said, even the typical rulemaking process typically takes months. But we are aiming to do it as quickly as possible. And so, we will give you more updates as we hit each milestone in that process.”

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

Forgiveness Amount Unknown

A downside of negotiated rulemaking is that the details aren't known until the final rulemaking sessions.

Therefore, nobody knows how much debt the government may decide to cancel through this process.

It's plausible to assume that the Biden administration will 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.

Many borrowers and advocates suggested that ED mirror this plan during public comment on July 18.

Even if ED decides to propose a plan similar to its 2022 proposal, negotiators will soon go back and forth with the department to determine the best plan.

Advocates for student loan borrowers, for example, may advocate for more expansive debt cancellation. Advocates for student loan servicers, meanwhile, may push for a tighter income cap to limit the total amount forgiven.

ED’s call for nominees for the committee included the following interest groups that must be included:

• Student loan borrowers who attended a two-year program
• Student loan borrowers who attended a four-year program
• Student loan borrowers who attended a graduate program
• Currently enrolled college students
• Military service members, veterans, or groups representing them
• Civil rights organizations
• Legal assistance organizations that represent students or borrowers
• State officials, including higher education executive officers, authorizing agencies, or state regulators
• State attorneys general
• Public colleges and universities
• Private, nonprofit colleges and universities
• For-profit institutions
• Minority-serving institutions
• Federal Family Education Loan (FFEL) lenders, servicers, or guaranty agencies

People have until Sept. 14 to submit an application to serve on the rulemaking committee.

Ultimately, the department will have the final say in any new rule unless negotiators reach consensus.

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 decision making 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.