Biden plots new course to get relief for student loan borrowers

President Biden on Friday announced new actions to offer student loan borrowers some forgiveness, reintroducing his forgiveness plan grounded in the Higher Education Act (HEA).

Using the HEA to provide student debt relief has been pushed by student loan advocates and top Democrats for years. Under the HEA, advocates argue it allows the education secretary to “compromise, waive or release” student loans. This path will require a public comment and notice period before it could go into effect. 

“We need to find a new way, and we’re moving as fast as we can,” he said in Friday afternoon remarks at the White House.

The administration had tied the student debt relief plan — struck down by the Supreme Court — to the national emergency established during the COVID-19 public health crisis, citing the Higher Education Relief Opportunities for Students (HEROES) Act. Chief Justice John Roberts wrote in the court’s majority opinion, issued Friday morning, that the HEROES Act does not grant the authority. 

Biden did not offer further details about who would qualify or how much debt relief borrowers would receive under his new plan to use the HEA, but he said Education Secretary Miguel Cardona has taken steps to initiate the rulemaking process.

The department sent out a notice Friday, the first step in the “negotiated rulemaking” process. The first public hearing on the matter will happen July 18 to get input from stakeholders. The process could go well to the end of 2023, but the administration said it will try to move “as quickly as possible.”

“This student debt relief is not being implemented automatically. This is a hot mess. This will be a bureaucratic nightmare,” Braxton Brewington, press secretary for Debt Collective, said in response to the announcement.

The president also announced the administration will launch an “on-ramp” repayment program for borrowers who may miss payments when they resume this fall. It would remove the threat of default or harm to credit ratings because the Education Department won’t refer borrowers who miss payments to collection agencies or credit bureaus for 12 months.

“If you can pay your monthly bills you should, but if you cannot, if you miss payments, this on-ramp temporarily removes the threat of default or having your credit harmed,” Biden said.

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More on SCOTUS’s student loans ruling from The Hill

• Supreme Court strikes down Biden’s student debt forgiveness plan
• Supreme Court blocks student loan forgiveness: What should borrowers do now?
• Biden bristles at reporter asking if he gave student loan borrowers ‘false hope’
• Student loan decision: Kagan says court ‘exceeds its proper, limited role’
• READ: Supreme Court rulings on Biden’s student loan forgiveness plan

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Student debt payments have been paused since the pandemic, but in a deal with Speaker of the House Kevin McCarthy (R-Calif.) to secure a debt ceiling agreement, Biden set in stone the resumption of repayments beginning in October. Interest will begin to accrue again at the beginning of September. 

The Supreme Court’s Friday decision stopped more than 40 million borrowers from receiving loan forgiveness and delivered a major defeat to one of the president’s key campaign promises. The decision limits Biden’s options to deliver on that promise.

The program, announced in August, would have canceled up to $20,000 in loans for Pell Grant recipients and $10,000 for other borrowers, if the individual’s income is less than $125,000.

Soon after the Supreme Court struck down the president’s student loan forgiveness plan, the White House said it was prepared and that Biden had a new action to roll out.

The announcement comes after the White House refused to talk about its “Plan B” for months while student debt relief was held up in the court system. 

Updated at 4:41 p.m.