Written By Adam S. Minsky, JD
The push to convince President Biden to enact broad student loan forgiveness continues, even as the administration maintains that it is evaluating its options.
This week, a coalition of progressive House Democrats sent a letter to Biden's Secretary of Education Miguel Cardona, urging him to provide a timeline for enacting student loan forgiveness and pressing him to give details on how widespread student loan forgiveness would be implemented.
Here’s the latest.
Will Biden enact broad student loan cancellation? Here’s where things stand
In April 2022, the Biden administration suggested that an executive order to broadly cancel federal student loan debt could be imminent. President Biden himself suggested that a final decision could be made within a matter of weeks.
Since then, however, the situation has gotten less clear. Biden flat-out rejected calls to enact $50,000 or more in student loan forgiveness for every borrower, a figure that has been pushed by some of the leading voices in Congress, including Senator Elizabeth Warren (D-MA) and Senate Majority Leader Chuck Schumer (D-NY).
More recent reports suggest that the White House is more seriously considering a plan to wipe out $10,000 in federal student loan debt for borrowers, with an income cap to limit eligibility to single borrowers earning below $150,000 per year and jointly-filing married borrowers earning below $300,000 per year.
But nearly two months after the administration seemed to be moving toward enacting some form of broad loan forgiveness, no final decisions have been made. White House officials are now suggesting that the President may not make a decision until July or August, closer to when the ongoing student loan payment pause is scheduled to end.
Secretary Cardona said that borrowers would have a “long on-ramp” whenever the pause ends to prepare for the return to repayment. He said separately that the Education Department is “ready to roll” and will implement whatever student loan forgiveness initiative President Biden decides to move forward with.
But many questions remain unanswered, and key Democrats in Congress are getting impatient.
Progressive democrats demand answers on student loan forgiveness
On Wednesday, a coalition of progressive House Democrats, led by Rep. Ilhan Omar (D-MN), sent a letter to Secretary Cardona demanding answers and a clear timeline.
“We are writing to you to learn more about the specific plans your agency has made to implement the executive order [on student loan forgiveness],” wrote the coalition. “Specifically, we would like a comprehensive timeline for implementing the cancellation, including when your agency plans to begin canceling these loans and when you expect the process of canceling loans under the executive order to be completed.”
Noting that “millions” of student loan borrowers could ultimately benefit from an executive order on student loan forgiveness, and given the Department of Education’s poor track record of implementing complex student loan relief programs, the coalition asked Cardona to clarify not only when student loan forgiveness would be provided to borrowers, but how any such initiative would be put into place. The coalition sought clarity on several key points, including:
- How the Department of Education will communicate with borrowers about a new student loan forgiveness initiative, both directly and through its network of contracted student loan servicing companies
- How the Department will incentivize loan servicers to affirmatively notify eligible borrowers that they may qualify for student loan cancellation
- How student loan forgiveness would be reflected in credit reporting, and whether negative credit reporting (including delinquencies and records of default) will be deleted from a borrower’s credit report following loan cancellation
- How the administration will implement an income cap and ensure that student loan forgiveness is administered efficiently without borrowers having to go through a lengthy application process (currently, the Education Department does not have any mechanism to obtain a borrower’s income or earnings information directly from other federal agencies due to constraints under existing federal law, which may necessitate individual applications for relief)
- Whether there will be an appeal process for borrowers who are erroneously denied student loan forgiveness
- How the Department will apply student loan cancellation for borrowers with multiple loans, and whether any such cancellation will have to first be applied to fees or interest before being applied to the principal (as is currently the case for typical student loan payments)
The coalition urged President Biden to not only go forward with an executive action to cancel student loan debt but to ensure that the Department of Education has the necessary administrative and technological support to implement the initiative smoothly and efficiently.
“We look forward to seeing the President issue the executive order to cancel student debt and supporting the agency in providing the relief owed to the borrowers,” concluded the coalition in its letter.
Legal basis for broad student forgiveness
Student loan legal experts, advocacy organizations, and top Democratic lawmakers have argued that the Higher Education Act (HEA) — a sprawling federal statute that governs much of the federal student loan system — has a provision that gives the President (via the Secretary of Education) broad legal authority to “compromise” or “waive” student loan debt. But that authority has never been put to the test on a mass scale.
Other scholars and key officials, including former Department of Education attorneys under the prior administration – had argued that utilizing this provision would dramatically exceed the intention of Congress when it initially passed the HEA.
Other experts have pointed to the HEROES Act of 2003, another federal statute that, among other things, allows the Secretary of Education to “modify” existing federal student loan programs during national emergencies. Unlike the provision in the HEA, the HEROES Act of 2003 has been invoked successfully by both President Trump and President Biden to suspend billions of dollars in student loan payments and interest under repeated short-term extensions to the CARES Act of 2020, which originally paused federal student loan payments and interest for six months. Biden's most recent extension is set to end on August 31.
The Biden administration has not indicated the legal basis for any broad student loan cancellation initiative under consideration.
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