On June 30, 2023, the U.S. Supreme Court ruled in Biden v. Nebraska that the Biden-Harris administration’s plan to cancel up to $10,000 in student loan debt per borrower—and up to $20,000 for Pell Grant recipients—was not legal under the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act of 2003. That same day, President Joe Biden announced his administration would keep fighting for borrowers by pursuing broad-based debt relief under a different legal authority, the Higher Education Act (HEA) of 1965.
The HEA requires a more lengthy process to make changes to regulations related to federal student aid, called “negotiated rulemaking” (or “NegReg” for short). This process will bring together stakeholders from various affected groups—such as student loan borrowers, loan servicers, colleges and universities, and legal assistance organizations—to draft language for new or amended regulations.
Alleviating the burden of student loan debt for current and future borrowers can help ensure that higher education remains a pathway, rather than a roadblock, to financial stability.
The negotiation sessions, which are virtual and open to the public, will be held from October through December 2023. This column unpacks what to expect from this process, its likelihood of leading to further student loan relief, additional legal challenges these efforts may face, and what else is on the horizon for student loan borrowers.
What is the Biden-Harris administration doing to deliver debt relief for student loan borrowers?
The Biden administration and the U.S. Department of Education have initiated a negotiated rulemaking process to develop new regulations to determine how student debt relief will be implemented under the HEA.
Although the Supreme Court struck down the Biden administration’s first action to deliver broad-based debt relief, President Biden reaffirmed his commitment to borrowers when he announced a “new path consistent with [the Supreme Court’s] ruling to provide student debt relief to as many borrowers as possible as quickly as possible.”
And in early July 2023, the Department of Education initiated the negotiated rulemaking process to add or amend regulations stemming from the HEA, the major piece of legislation that forms the foundation for federal higher education policy. Section 432(a)(6) of the Higher Education Act of 1965 grants the secretary of education the authority to “enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.” This power is further defined by 34 C.F.R. § 30.70, a regulation that also describes the secretary’s authority to “compromise a debt in any amount, or suspend or terminate collection of a debt in any amount.” The Biden-Harris administration and many advocates argue that this section explicitly gives the secretary of education the power to cancel student loans. In particular, advocates point to the authority to “compromise” debt, or agree to accept less than the original amount of a debt, which is enumerated here.
Regulations set out more specific language for exactly how a law will be implemented. The regulatory language that results from the upcoming rulemaking will define the processes the secretary uses to cancel debt and may include details about the conditions under which this may happen, who would receive relief, and, potentially, how much these borrowers would receive. Groups that support student debt relief will want to see regulations developed that are strong enough to withstand potential legal challenges, which are a near certainty. There is also a possibility that regulatory language within other sections of the HEA relating to student debt relief may be added or amended in this process.
While the Biden-Harris administration is using every tool within its power to improve the student loan system and deliver broad-based cancellation for borrowers, greater and longer-lasting changes may need to ultimately come from Congress in the form of new legislation.
When publishing the announcement of the negotiated rulemaking, the Education Department offered a written comment period and public hearing to offer the general public the opportunity to comment on the issue of federal student loan debt relief; like the Biden administration’s first student debt relief action, this one will only apply to student loan debt held by the Department of Education, not any privately held student loans. The department received more than 26,000 written comments, all of which will be read and taken into account when drafting regulations. The final regulation, or “rule,” will also summarize and respond to the key issues raised in public comments.
What is the likelihood of these efforts succeeding, and when might borrowers see relief if they do?
There are many steps in the process, all of which require due diligence from various government agencies and input from the public, so the earliest that borrowers might see cancellation under this new authority would likely be in the summer or fall of 2024. However, these steps will strengthen the regulation to ensure the highest possible likelihood that student debt relief actions taken under its authority will ultimately stand up to legal challenge. (For a full overview of the regulatory process, see this flowchart. As of the publication date of this column, the rule is in Step 3.)
Student debt relief stakeholder negotiations (October–December 2023)
Following a call for nominations, the Department of Education announced the negotiators who will serve on the rulemaking committee. Each negotiator will represent their constituency group in the discussion and work with other negotiators to develop proposed rule text that is amenable to all affected groups. To guide the discussions, the department also released an issue paper that provides key information about the policy issues under discussion, as well as the underlying statute and other relevant regulations.
In the issue paper, the department laid out questions for the committee to address regarding different groups of borrowers, including those:
- “whose balances are greater than what they originally borrowed”
- “whose loans first entered repayment decades ago”
- “who attended programs that did not provide sufficient financial value”
- “who are eligible for relief under programs like income-driven repayment but have not applied”
- “who have experienced financial hardship and need support, but for whom the current student loan system does not adequately address”
These questions suggest that the department has in mind categories of borrowers whose circumstances may offer the strongest legal foundation for additional relief. Whether relief will be restricted to these borrowers and what form this relief may take, however, is yet to be determined by both the final form of the regulations and any actions the secretary of education may take in the future under the HEA’s authority.
Once stakeholder negotiations end in December 2023, there are two possible outcomes: 1) negotiators reach consensus, which means that no member of the negotiating committee disagreed with the proposed rule and the department will use that regulatory language to outline the proposed rule; or 2) consensus is not reached, and the department can either use the language that originated in the negotiations as the foundation for the proposed rule or develop new language for all or a portion of its proposed rule, but it is not legally required to do so.
Following the negotiation sessions, the department will develop a proposed rule and send it to the Office of Information and Regulatory Affairs (OIRA) within the U.S. Office of Management and Budget (OMB). At this stage, OMB will determine if the proposed regulation is likely to be economically significant. Notably, any action related to student debt relief is likely to have a large enough economic impact to be considered “significant,” which OMB defines as greater than $100 million per year. If this determination is reached, OMB will have 90 days to review the final rule before it goes into effect and may invite other agencies to review it as well. OIRA also has the option of waiving this review process.
The earliest that borrowers might see cancellation under this new authority would likely be in the summer or fall of 2024.
Next, the Department of Education will publish a notice of proposed rulemaking (NPRM) in the Federal Register, and the public will have another opportunity for comment. These comments will be considered as the department develops the final regulation that is then sent to OMB for review. After OMB reviews the final rule, the department will publish it in the Federal Register. Generally, rules cannot take effect until at least 30 days after publication in the Federal Register—or 60 days for significant, or “major,” rules—per the Congressional Review Act.
Most regulations relating to federal student aid—or Title IV—programs require that final rules be published on November 1 of the preceding year in order to go into effect by July 1. This is, generally, so that higher education institutions, borrowers, student loan servicers, and other affected parties have time to prepare for the new rule. However, HEA section 482(c)(2) also permits the secretary to allow early implementation in some cases. The Biden-Harris administration enacted early implementation for parts of the Saving on a Valuable Education (SAVE) repayment plan, for example. Similarly, student debt relief would be a good candidate for early implementation, because its enactment would not adversely affect the “timely delivery of student aid funds,” as outlined in 20 U.S.C. 1089(c)(2).
President Biden and Secretary of Education Miguel Cardona have repeatedly expressed their commitment to delivering relief to borrowers as quickly as the law will allow. There are multiple points in this process where the executive branch can choose to act swiftly and shorten steps, allowing for the possibility that borrowers may see debt relief before the end of 2024.
Could there be additional legal challenges?
The Biden-Harris administration is following a rigorous regulatory process to ensure any final rule related to student debt relief has the best possible chance of surviving legal challenges.
Congress has the opportunity to review the final rule under the Congressional Review Act. Major rules allow Congress 60 days for review, during which time Congress may pass a joint resolution of disapproval to overturn the rule. If a president then vetoes this joint resolution, Congress can vote to override the veto with two-thirds majority support from both chambers. If the override vote fails, then the rule goes into effect.
What actions have the Biden-Harris administration already taken to improve the student loan system?
A lot has happened since the payment pause began at the start of the COVID-19 pandemic in March 2020. Over the past several years, the Biden-Harris administration introduced a number of changes—some temporary and some permanent—to improve the student loan repayment system and deliver relief to eligible borrowers, including:
- The payment pause: Payments were paused and interest was suspended for federal student loans from March 2020 until September 2023. The payment pause time period counts toward forgiveness under income-driven repayment (IDR) plans and the Public Service Loan Forgiveness (PSLF) program for eligible borrowers. Those who made payments during the pause and would like a refund can receive one by contacting their student loan servicer.
- PSLF waiver: In October 2021, the Biden-Harris administration announced major improvements to the PSLF program to help deliver on its promises. In 2018, 99 percent of borrowers who applied for forgiveness under PSLF were rejected due to administrative failures, servicer errors, unclear information, and other issues. The Biden-Harris administration took important steps to remedy these issues by issuing a waiver to count payments that had not previously been eligible and reviewing denied applications, among other changes. As of October 2023, the Department of Education has discharged almost $51 billion in approved PSLF applications for 715,000 student loan borrowers who work in public service. More approvals will be issued as the PSLF program continues to improve from the fixes that had previously prevented 99 percent of eligible public service workers from receiving the relief they had earned. The waiver period ended in October 2022, but those who work in public service can still apply to the PSLF program.
- IDR one-time account adjustment: The Biden-Harris administration fixed historical failures in income-driven payment plans—such as problems resulting from forbearance steering—and reviewed IDR records to ensure borrowers’ payments were fairly counted. As a result of this policy, almost 855,000 borrowers in IDR plans received nearly $42 billion in automatic loan cancellation. Borrowers who think their IDR payments can or should be recalculated can submit a complaint.
- Fresh start for defaulted borrowers: The one-time temporary program known as Fresh Start gave borrowers in default an opportunity to get out of default and enroll in an affordable repayment plan.
- Borrower defense settlements approved: The administration also continued to deliver on its promise to rectify harm done to students whose predatory colleges engaged in wrongdoing or closed without warning, approving $22.5 billion in relief for more than 1.3 million borrowers. Under the Biden-Harris administration so far, more than 6 million eligible individuals have received loan forgiveness, totaling $127 billion in debt cancellation.
What can borrowers do to continue to advocate for student loan debt relief?
Since all negotiated rulemaking sessions will be held virtually and will be available for the public to view, interested parties are highly encouraged to watch the negotiations and participate in the public comment period at the end of each day during the committee sessions. This is an opportunity for affected parties to share their borrower stories, concerns, or hopes for the future of debt relief.
Negotiated rulemaking committee dates
Session 1: October 10–11, 2023
Session 2: November 6–7, 2023
Session 3: December 11–12, 2023
Session times will be from 10:00 a.m. to 12:00 p.m. and 1:00 p.m. to 4:00 p.m. ET.
The public comment period will be held from approximately 3:30 p.m. to 4:00 p.m. ET.
The future of student debt forgiveness is at a critical juncture. As observed over the past year, the success and longevity of any student debt forgiveness plan depends heavily on the decisions made by our elected leaders and policymakers. While the Biden-Harris administration is using every tool within its power to improve the student loan system and deliver broad-based cancellation for borrowers, greater and longer-lasting changes may need to ultimately come from Congress in the form of new legislation. Alleviating the burden of student loan debt for current and future borrowers can help ensure that higher education remains a pathway, rather than a roadblock, to financial stability.