Biden’s new student loan relief plan — and its legal challenges — face a long road

President Biden’s first student loan forgiveness plan lasted 10 months from its proposal to death by Supreme Court. His next one could take much longer to even implement, let alone challenge. 

The new plan will be subject to a lengthy rulemaking process under the Higher Education Act (HEA), potentially leaving the fate of relief up in the air well into election season.

Those involved in the recent high court fight are already raising red flags about the legality of Biden’s second swing at the issue.

Nebraska Attorney General Mike Hilgers (R), whose office argued the first case at the Supreme Court earlier this year, said in an interview that suing over Biden’s new plan was on the table but that it was too early to preview any legal action.

“Our office, and I think a lot of other state AGs, our sister states, are very vigilant with this administration’s executive actions, whether they’re proposed rules or regulation or executive orders. And that would include this potential proposal — to see whether or not they’re within the constitutional boundaries,” Hilgers said.

Hours after the Supreme Court struck down his earlier proposal last month, Biden announced his new plan to use the HEA to deliver debt relief to students. 

At minimum, it is likely months before it could be finalized under the negotiated rulemaking process. Currently, little is known about how much debt relief will become available under the plan and who would qualify for it. 

“Let’s see what the details are and have that sort of space and time to be able to analyze those details,” Hilgers said.

Abby Shafroth, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, pointed out that any eventual policy would need to be finalized for it to be challenged in court, an even longer timeline that could stretch well into next year.

“I do think that any plan that comes out of this process will be on really solid legal ground. That said, the issue has clearly become highly politicized, and we saw a number of ideological-driven challenges last plan, and so we could see those again,” said Shafroth, whose organization filed an amicus brief in support of Biden’s first forgiveness attempt.

If all goes well, the plan could be finalized in the spring or summer of next year, she said. 

Biden’s now-defunct plan moved quickly under the HEROES Act, which was tied to emergency authority during the pandemic. Lawsuits began within weeks of its announcement last August, and the Supreme Court scheduled the case so it could be decided this term.

There are concerns among debt relief advocates that the timeline of the new plan and its opponents could run through the next election, meaning its fate could ultimately be up to who wins the presidency.

“If a rule has been finalized but hasn’t yet been implemented, then an administration can initiate a rulemaking process to repeal it, essentially. So that’s one risk,” Shafroth said. 

Mark Chenoweth, president and general counsel at New Civil Liberties Alliance, which opposed Biden’s first plan, said the administration has lost significant time.

“They would rather take the illegal shortcut than the path that’s gonna take more time. If they had just done this in the first place, they might be close to the finish line on whatever they were going to do on the Higher Education Act,” Chenoweth said, adding the White House was at least following the correct procedures in attempting to leverage the HEA.

The plan is expected to be rooted in the HEA’s provision that allows the Education Department to “compromise, waive or release” loans. At the center of the recent Supreme Court challenges was the HEROES Act’s “waive or modify” language, which the court ruled did not authorize debt cancellation.

“You can’t just take authority that was given to the department to compromise debt in a different kind of way and use that as authority to forgive debt for policy reasons,” Chenoweth said of the new plan. “So I think as long as they’re on that path, they’re likely to run into a Supreme Court backstop at some point.”

Others, however, aren’t so sure new challenges would manage to reach the 6-3 conservative majority high court. 

“Remembering that there were originally over a dozen cases were challenging the August plan and most of them failed,” said Persis Yu, deputy executive director and managing counsel for Student Borrower Protection Center, which had joined a brief backing the Biden administration in the prior case.

“I think if we look historically, like yes, we see that there are lots of right-wing opponents willing to bring this litigation, but we also see that most of them fail,” Yu added.

Another risk if a new administration comes into power, Shafroth noted, is that Congress could repeal the plan through the Congressional Review Act (CRA), which allows lawmakers to rescind rules enacted by the executive level. 

Earlier this year, Republicans in both the House and the Senate, with help from a few Democrats, were able to pass a resolution under the CRA that would have stopped Biden’s initial loan forgiveness. Biden vetoed the move, but a new administration might let it pass. 

The scale of Biden’s second effort, which could also impact court challenges, remains to be seen.

The previous attempt became the fourth recent case in which the Supreme Court’s conservative majority brought in the so-called major questions doctrine, which requires agencies enacting programs of “vast economic and political significance” to meet the high bar of showing clear authorization from Congress.

Chief Justice John Roberts’s majority opinion called the Biden plan’s scale “staggering,” noting the roughly $500 billion price tag.

Chenoweth said recent comments from the Education Department signal the administration is aiming for another massive cancellation program.

“I fear that they’re trying to get to the same place in terms of blanket forgiveness of student loans in the hundreds of billions of dollars,” he said. “And I just think Congress needs to be involved in that decision. So I’m not optimistic that they’re going to wind up in a place that is allowed. But they could, I mean, the procedure that they’re following could conceivably put them there.”