US President Joe Biden speaks in the East Room of the White House in Washington, DC, on August 12, ... [+]AFP VIA GETTY IMAGES
As advocates for student loan borrowers continue to press President Biden to enact broad student loan forgiveness, his administration has remained largely quiet about its specific intentions — but officials have provided some clear signals.
The administration has been reviewing the legality of broad student loan cancellation since April. While President Biden has shown support for some form of student debt cancellation, he has consistently expressed skepticism about wiping out $50,000 or more in student loan debt for every borrower without conditions, as he has been urged to do by progressive Democrats in Congress and student loan borrower advocacy groups.
Biden has also expressed concern about whether he would have sufficient legal authority to act. Student loan legal scholars and advocacy groups have argued that the President does have the authority under federal law to unilaterally cancel student loan debt on a mass scale, but others have disagreed, and the theory has never been tested.
Both President Biden and officials from his administration have pushed for a more “targeted” approach to student loan forgiveness — a word that has been used by administration officials repeatedly this year, and as recently as this month. But “targeted” has not been clearly defined. Based on the Biden administration’s actions on student loan debt so far, even a so-called “targeted” approach to student debt cancellation could result in widespread relief for millions of student loan borrowers. However, it could also fall far short of what advocates hope the administration might do. Here’s what could be in store.
Executive Action To Cancel Student Loan Debt Under Existing Student Loan Forgiveness Programs
The Biden administration has the potential authority to provide more widespread relief to student loan borrowers under existing programs that already provide student loan forgiveness:
The Borrower Defense To Repayment program was established to provide debt relief to borrowers who were defrauded by their schools, but tens of thousands of applications have been held up for years amidst legal and political wrangling, primarily during the Trump administration. Biden’s Education Department has already acted to expand relief to thousands of borrowers, resulting in hundreds of millions of dollars in student loan forgiveness. The administration has recently installed key pro-borrower figures with backgrounds in Borrower Defense in positions of authority at the Department of Education, which could be a signal that Biden intends to continue an expansion of relief under this program.
The Total and Permanent Disability (TPD)discharge program allows student loan borrowers who are disabled to get their federal student loans wiped out. But borrowers have to affirmatively apply for the relief in most cases, which can be difficult or impossible for those who live with crippling disabilities. Advocates have argued that the Department of Education has sufficient information available through inter-governmental information sharing to automatically cancel the federal student loan debts of over 500,000 borrowers.
The Public Service Loan Forgiveness (PSLF) allows borrowers employed by public and nonprofit organizations to get their loans forgiven after 10 years of service. But the PSLF program has complicated eligibility criteria, and ongoing student loan servicing problems have contributed to a 98% denial rate for applicants. Advocates have argued that the President has the authority to relax the requirements of the PSLF program, which could result in billions of dollars in immediate student loan forgiveness. Education Secretary Miguel Cardona has expressed support for “fixing” the PSLF program.
Executive Action To Cancel Student Loan Debt, But Only For Some Borrowers
Several leading student loan legal experts have argued that President Biden has broad authority under the Higher Education Act (HEA) to cancel student debt using executive action. Advocates of mass student loan forgiveness have also pointed to the HEROES Act — another federal statute underlying financial aid and student loan programs — as a potential authority during times of emergencies. Both former President Trump and President Biden relied on the HEROES Act for authority to use executive action to suspend billions of dollars in student loan interest after the original CARES Act payment pause expired. Department of Education officials under former Education Secretary Betsy DeVos, however, argued that widespread cancellation of student loans would go beyond the President’s statutory authority under both the HEA and the HEROES Act.
Biden could nevertheless proceed to cancel student loan debt using one or both of these statutory authorities, risking potential court challenges. However, based on his past comments expressing concerns that widespread student loan forgiveness would benefit wealthy graduates of Ivy League schools (despite the fact that such concerns would appear to be unfounded), Biden may try to limit relief based on certain criteria, such as a borrower’s income or the type of school they attended.
Regulatory Action To Cancel Student Loan Debt
The Biden administration is moving forward with a potentially massive rewrite of regulations governing key federal student loan forgiveness programs including Borrower Defense to Repayment, Public Service Loan Forgiveness, the Total and Permanent Disability Discharge program, and income-driven repayment plans. The administration has made it clear that its intent is to reform these programs to improve “borrowers’ access to benefits that reduce the burden of federal student loans” and to provide additional avenues for “targeted discharges” of federal student loan debt.
Changing how these programs work could ultimately result in substantial relief for a wide swath of borrowers. But the regulatory rewrite process — called negotiated rulemaking — is painfully slow, involving multiple rounds of public hearings and consensus-building. It could be one to two years before the process is complete and new regulations are finalized.
Legislative Action To Cancel Student Loan Debt
The Biden administration would likely cooperate with Congress to enact more far-reaching student loan reforms. For example, the Senate has unveiled a student loan bankruptcy reform billthat would relax the strict rules that make discharging federal student loans in bankruptcy extremely difficult. The bill has rare, bipartisan support, and Biden has expressed recent support for student loan bankruptcy reform, making it likely that he would sign the bill if it passes Congress. Biden has also expressed support for legislation that would expand relief under Public Service Loan Forgiveness.
These individual actions on student loan debt could seem minimal at first glance, but taken together, they would provide very real, and potentially widespread, relief to millions of student loan borrowers. Some borrowers could see well over $50,000 in student loan forgiveness, since several existing programs — including PSLF, the TPD discharge program, and Borrower Defense to Repayment — have no caps or limits on relief. Furthermore, these actions would allow the Biden administration to claim it is providing “targeted” student loan relief to those who need it most, while avoiding potential political blowback and legal challenges that could result from unilateral mass student loan cancellation.
But such an approach may not satisfy the most ardent supporters of broad cancellation of student debt. Relief would be provided in fits and starts, and many borrowers would not see any benefits before the expiration of the student loan payment pause (which President Biden recently extended to January 31, 2022); that could lead to hardship and default for many. Some borrowers — in particular, private student loan borrowers, Parent PLUS borrowers, and borrowers who work in the private sector — may not see much relief at all through these potential “targeted” actions. As a result, advocacy groups for borrowers will likely continue to aggressively push for mass student loan cancellation.