Student Loan Forgiveness Under Higher Education Act Gains Steam

The Biden administration is moving forward with efforts to create a new student loan forgiveness plan. This “Plan B” approach, following the Supreme Court Ruling in June that overturned Biden’s initial student debt relief program, will be designed to provide an alternative pathway to broad student loan cancellation.

This week, the Education Department announced new details on the timeline and process for next steps as the student loan forgiveness “backup plan” is developed. Here’s the latest.

Student loan forgiveness “Plan B”

In July, the Education Department officially kicked off the process of establishing the new student loan forgiveness plan. This alternative program will be enacted under the Higher Education Act (HEA), a different legal authority from the one that was the basis for Biden’s initial plan, which ultimately was tossed by the Supreme Court in June. That earlier plan had been established via the HEROES Act of 2003, which allows the Secretary of Education to “modify” or “waive” key federal student loan provisions in response to a national emergency.

Applying the so-called “Major Questions Doctrine,” which the conservative Supreme Court majority has used in the past to strike down major federal programs, where Congress did not clearly and explicitly authorize it via statute, the Supreme Court interpreted the HEROES Act’s text narrowly and concluded that it did not allow for sweeping student loan forgiveness.

The Biden administration is now crafting a new program under the HEA. The HEA has its own statutory provision that gives the Education Department authority to “compromise” or “waive” federal student loan obligations. And in contrast to the HEROES Act, the Department has already utilized this authority in multiple contexts, such as by accepting less than the full loan amount to resolve defaulted federal student loans, or settling class action lawsuits by broadly cancelling federal student debt.

But while the HEROES Act’s emergency authority allows the Education Department to move quickly, the process for establishing new programs and procedures under the HEA is far more complex. Federal law requires the administration to go through what’s called “negotiated rulemaking,” a lengthy process to draft new regulations that necessities the convening of key stakeholders who must form an official committee, hold public hearings, and consider public input. The process can take many months, if not longer.

Biden Administration Moves Forward to Establish Student Loan Forgiveness Plan Under HEA

This week, the Education Department announced next steps in the negotiated rulemaking process as officials press ahead to create a new student loan forgiveness plan under the HEA. The Department announced that it will begin forming a negotiated rulemaking committee (which it is calling the Student Loan Relief committee), which will be comprised of key stakeholders. This committee will be responsible for determining the parameters of the new student loan forgiveness plan under the HEA, and drafting the applicable regulations governing the program.

“When the Supreme Court ruled against the Biden-Harris Administration’s student debt relief plan, we did not waste a moment opening up a new pathway to debt relief,” said U.S. Secretary of Education Miguel Cardona in a statement this week. “As we pursue debt relief through this process, one of the most important steps is bringing together diverse perspectives to help us craft the strongest possible regulations for borrowers. The Student Loan Relief committee will include students, borrowers, state officials, civil rights advocates, representatives from colleges and universities, and other stakeholders so we can make sure all voices are heard and the needs of borrowers are fully considered.”

The Department is now accepting nominations for individuals to serve on the Student Loan Relief committee. The committee will contain the following positions:

• Four spots for current students and student loan borrowers
• Four spots for different types of institutions of higher education
• Two spots for state officials and attorneys general
• Two spots for civil rights organizations and legal assistance organizations
• One spot for a U.S. military service member or veteran
• One spot for a representative from the Federal Family Education Loan (FFEL) program

After the committee is formed, there will be public hearings. “Negotiators selected by the Department will meet virtually on October 10-11, November 6-7, and December 11-12 to discuss ideas for regulatory reform. Sessions will be open to the public and include opportunities for public comment,” says the Department.

After that, the Department will publish proposed regulations governing the new student loan forgiveness plan. Those draft regulations will then be subject to a public comment period, which the committee and the Education Department will need to consider before finalizing the new rules and launching the program.

Advocates press Biden to speed up student loan forgiveness

The negotiated rulemaking process is lengthy, as indicated by the timeline provided by the Education Department so far. It is unlikely that the new student loan forgiveness plan will be in place prior to next summer.

Still, advocacy groups and Democrats in congress are stepping up a pressure campaign to convince the Biden administration to move more quickly. Last week, nearly 90 congressional Democrats sent a letter to President Biden, urging him to quickly enact the new student loan forgiveness plan.

“Borrowers have already waited nearly a year for the relief you announced in August 2022, and critics of your plan to help 43 million Americans are likely to renew their attacks with regard to your rulemaking announcement,” wrote the lawmakers. “We urge you to reject their bad-faith, partisan attempts to delay relief and carry out your efforts to help borrowers as quickly as possible.”

In addition, last week the Debt Collective – a debtor’s union representing the interests of student loan borrowers and other consumer debtors – released an online tool designed to allow borrowers to submit individualized requests for student loan forgiveness under the Higher Education Act, even before the new student loan forgiveness plan is established. The tool reflects earlier activist efforts to obtain student debt relief for borrowers through Borrower Defense to Repayment before an official application process for that program was established – efforts that ultimately proved to be successful.

“In 2015… When students were defrauded at the predatory for-profit Corinthian Colleges, the Debt Collective used an obscure line in the Higher Education Act that promised debt relief for defrauded borrowers,” said the Debt Collective in a statement. The group, “created its own application, requesting borrower information on their loans and personal situation, and then sent thousands of applications to the Department of Education. The Department of Education later picked up that form, creating the process now known as a ‘Borrower Defense’ application. Today’s newly rolled-out [tool] mimics that successful organizing history, putting student debt relief on the map for everyone.”

It is unclear at this time whether the Education Department will consider individualized applications for debt relief generated through the new tool.