Why Biden's new plan to cancel student debt is going to take a lot longer than his first proposal
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- After the Supreme Court struck down Biden's first student-debt relief plan, he announced he'll be trying again.
- He started the process to use the Higher Education Act of 1965, but it will take longer this time.
- That's because that Act requires Biden to hold public hearings and solicit feedback on the proposal.
President Joe Biden isn't letting Friday's Supreme Court decision stop him from trying to get student-debt relief to millions of borrowers. But it could take some time.
On Friday, the high court struck down Biden's first plan to cancel up to $20,000 in student debt for federal borrowers using the HEROES Act of 2003. That Act allows the Education Secretary to waive or modify student-loan balances in connection with a national emergency, like COVID-19 — but the Supreme Court majority ruled Biden's usage of that act was an overreach of authority and cannot be implemented.
However, just hours after the Supreme Court handed down that decision, Biden and Education Secretary Miguel Cardona announced they'll be trying again, using the Higher Education Act of 1965.
"That will allow Secretary Cardona, who is with me today, to compromise, waive, or release loans under certain circumstances," Biden said during Friday remarks. "This new path is legally sound. It's going to take longer, but, in my view, it's the best path that remains to providing for as many borrowers as possible with debt relief."
The reason this process will take longer is because the Higher Education Act must go through the negotiated rulemaking process, in which it could take months — at minimum — to hold public hearings on the law and solicit public comment.
"Like I said, we have to do these public hearings," Bharat Ramamurti, deputy director of the National Economic Council, said during a Friday press briefing. "There has to be a certain amount of preparation to do the public hearings. You have to intake the comments that you get from the public, and then you have to decide whether to change your proposal accordingly before you do the next public hearing."
"It's going to be months," he added. "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."
Ramamurti noted that the first public hearing on the Higher Education Act will be in July, and the administration does not yet know when borrowers can expect a significant update. The HEROES Act, in contrast, exempted the administration from going through public comment and the negotiated rulemaking process, which is why Biden chose to go that route initially to try to get relief to borrowers more quickly.
Even as borrowers are continuing to wait for broad student-debt relief, it won't happen before payments resume in October. To ease the transition to repayment, Biden on Friday also announced a 12-month "on-ramp" period from October 1, 2023 to September 30, 2024 to ensure that borrowers who miss monthly payments do not get reported to credit agencies. Still, interest will accrue during this time, so Cardona recommended borrowers begin making payments again if they're financially able.
While Republican lawmakers lauded the Supreme Court decision, Democratic lawmakers celebrated Biden's effort to try again under the Higher Education Act.
"President Biden is right to fight back on behalf of working people in need of student debt cancellation," Warren wrote on Twitter on Friday. "The law is on his side. The President has the clear legal authority to cancel student debt under the Higher Education Act. In a democracy, we have the final say."