When Biden’s Next Student Student Loan Forgiveness Plan May Go Live

The Biden administration has taken significant steps to establish a brand new student loan forgiveness plan. The new program is intended to be a more legally viable alternative to the sweeping student debt relief initiative that the Supreme Court struck down last summer.

Unlike Biden’s first student loan forgiveness plan, the new program will take time to establish because of administrative requirements under the governing legal authority. The plan may not be available for borrowers until the summer of 2025. But there’s a good possibility it could go live sooner than that.

Here’s the latest.

Biden’s New Student Loan Forgiveness Plan Begins To Come Into Focus

President Biden’s first student loan forgiveness plan announced last year would have provided sweeping relief to millions. Borrowers with qualifying federal student loans who earned income within program guidelines could have received up to $20,000 in loan forgiveness.

The Biden administration had relied on the HEROES Act of 2003 to enact that student loan forgiveness plan. This statute provides emergency authority to the Education Department to modify of waive federal student loan rules in response to a national emergency (in this case, the Covid-19 pandemic). But the Supreme Court struck down the program last June; the Court’s conservative majority concluded that the loan forgiveness program exceeded HEROES Act authority, despite broad statutory language that the administration had argued allowed for such relief.

Shortly after the ruling, Biden announced he would try a different path to enact mass student loan forgiveness. This time, the administration would use the Higher Education Act to create the program. The HEA has a “compromise and settlement” provision that multiple Democratic and Republican administrations have already relied on to forgive or discharge student loan debt in various circumstances.

Earlier this month, the Education Department released a formal proposal indicating that the new loan forgiveness plan under the HEA would be more targeted to specific borrowers. The report outlined five potential groups of people who could qualify for student debt relief including borrowers facing extreme hardship, those who have seen significant balance increases due to interest capitalization, and borrowers with very old loans.

Long Process For New Student Loan Forgiveness Program

The Biden administration was able to enact the initial HEROES Act-based student loan forgiveness program relatively quickly. The emergency authority inherent in that statute allowed the Education Department to bypass what is normally a long, grinding process required to create new rules and regulations.

But the HEA does not have that same emergency authority. As a result, the department must go through a multi-step bureaucratic process called negotiated rulemaking, which involves a series of public hearings punctuated by periods of public comment. Only when this process has been completed can the department then finalize and implement new program regulations.

Because of mandated statutory time periods associated with negotiated rulemaking, this means that the new student loan forgiveness program under the HEA may not be available until the summer of 2025. Given the intervening presidential election, this could put the entire program at risk if a subsequent administration opts not to proceed with the relief.

Possible Accelerated Timeline For Student Loan Forgiveness

But implementation of the new student loan forgiveness plan in mid-2025 is not a given. The HEA also gives the Secretary of Education the authority of implement regulations early. And in fact, the Education Department is already exercising this early-enactment authority right now for the SAVE plan, a new income-driven repayment program designed to be more affordable than any other option.

Technically, the regulations governing the SAVE plan don’t go into effect until July 2024. But the Biden administration, via Education Secretary Miguel Cardona, authorized elements of the new SAVE plan to go into effect early. This has allowed millions of borrowers to enroll in SAVE and lower their monthly student loan payments now, rather than having to wait until next year.

The Biden administration could utilize this same authority to establish early implementation of the new student loan forgiveness plan. So far, officials have not announced an intention to do so. But public hearings associated with the negotiated rulemaking process will conclude in December, and draft regulations are expected to be released early next year. Given the upcoming presidential election the following November, it is certainly possible that the administration could make the new student loan forgiveness program available as early as the summer of 2024.