The Biden administration is giving student debt forgiveness another shot. But don’t expect this sequel to work out much better than the original, experts are warning.
“Everything seems set up to fail, but in an elongated way,” Braxton Brewington, press secretary of the Debt Collective, a pro-student loan cancellation group, told Semafor.
After the Supreme Court nixed his first attempt last week, President Biden quickly announced that he’d once again try to cancel student debt for millions of Americans under a different legal authority.
This time, the administration is invoking a section of the 1965 Higher Education Act, which allows the secretary of education to “compromise, waive, or release loans under certain circumstances.”
But that parallel track may do little to steel another debt relief program against legal challenges, higher education analysts told Semafor. The key reason: Conservative justices are already signaling that Congress hasn’t delegated specific authority to the executive branch for mass debt cancellation.
“I think the odds of it holding up in court seem to be quite low,” said Kevin Carey, vice president for education policy at the New America think tank.
Even before the court becomes an issue, the Biden administration’s second attempt at wiping out student debt could get bogged down in the regulatory process.
“It’s an incredibly complex process,” Michelle Dimino, deputy director of education policy at the Third Way think tank, told Semafor. “I think it’s a pretty risky route overall for the administration to be going with this and it certainly doesn’t offer a clear path forward for borrowers.”
The White House seems to be making a bet that taking another swing at student debt forgiveness is good politics, even if it’s likely to end with another loss in the courts.
It’s notable that Biden’s team had a fallback plan ready to go only hours after the high court struck down the program, a contrast with last year’s decision overturning a right to abortion, when the administration drew criticism from Democrats for appearing to be caught flat-footed.
A person familiar with the discussions said the White House had been communicating with Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., in the lead-up to the court decision. Both Warren and Sanders had been among the large faction of Democrats pressing the White House in early 2021 to use the Higher Education Act before it settled on trying to leverage the HEROES Act instead, which relates to national emergencies like the pandemic.
But the negotiated rule-making process at the Education Department is intricate and time-consuming — a parade of public hearings and stakeholder meetings that could easily take between 12 and 18 months (one advantage of using the HEROES act before was that it let the White House basically skip this process). Any court challenges would have to wait until the rule was finalized, meaning a final decision about its legality likely wouldn’t come until after the 2024 election.
National Economic Council Deputy Director Bharat Ramamurti said at a news conference last week that it was still “premature” to say whether the 16 million borrowers who had their applications approved for debt relief would be first in line. But he insisted the White House aims to wrap up the rulemaking process “as quickly as possible” while conceding it’ll take months.
There’s also lingering concern that the 12-month grace period that kicks in September 1 could confuse and anger borrowers who are counting on some form of debt relief after not paying off their balances for three years. Republicans are also assailing it as a backdoor extension of the moratorium.
“It’s one of these things where I think the administration is trying to do something good for borrowers here, but in the process, they’re kind of just making everyone mad,” Adam Minsky, a Boston-based student debt lawyer, told Semafor.
Some Democrats like Rep. Alexandria Ocasio-Cortez are calling on the Biden administration to suspend the interest payments set to start accruing in September. But that appears to be off the table. “The law requires us to end the payment pause this summer,” a White House official said. “We believe in the rule of law, and plan to follow it.”
Room for Disagreement
Some advocates believe that the administration could perhaps shrink the number of stakeholder meetings to accelerate student debt cancellation.
“I think that there are ways that they can speed up the process,” Persis Yu, deputy executive director of the Student Borrower Protection Center, told Semafor. “Depending on the scope of what they want to put on this agenda, it can be quite narrow and quick.”