- Biden is negotiating rules to implement a new student-loan relief plan.
- His education department recently took 15 months to go through that process.
- This process requires the administration to negotiate and seek public input.
Student loan forgiveness may not reach borrowers immediately.
After the Supreme Court rejected President Joe Biden’s first attempt to cancel student loans using the HEROES Act of 2003, the Department of Education announced it would try again, this time using the Higher Education Act of 1965.
The HEROES Act allowed the Secretary of Education to waive or modify student loans in connection with the national emergency, allowing the government to act swiftly on relief. The High Court ruled that Biden’s use of the Act for broad student debt relief exceeded his authority, but did not rule out the possibility of applying the Higher Education Act as an alternative means of getting borrowers to write off their debts.
The Act allows the Department of Education to “enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand” relating to federal student debt. But the law requires Mr. Biden to go through a negotiated rule-making process. Before the department implements the policy, it must publish the proposal in the Federal Register so that the public can comment on it. That first proposal is known as the “Notice of Proposed Rulemaking.” Once the ministry makes its proposal public, it will hold public hearings and a series of negotiations with stakeholders and experts until all parties reach agreement on the regulation.
The process has historically taken a long time, meaning that new attempts at broader student debt relief may not materialize for some time.
There is no set timeline for the department to complete this process, and it has been subject to change in the past. Under the Biden administration, however, the negotiated rulemaking process for a series of higher education reforms was the fastest. Start August 2021and the official rules have been published at the beginning of novemberabout 15 months in total.
Of course, the timeline for this new plan for student debt relief could be sooner, and Department of Education officials have said they will work as soon as possible under the process to help debtors. Also, the schedule does not take into account any lawsuits that may arise.
“We want to help borrowers disappointed with the basic deal of federal student loans, where investing in yourself and your education leads to a better life,” Undersecretary of Education James Couvar said at a hearing on Tuesday. “Thanks to those whose debts have gotten out of hand while making the payments we demand, we intend to help as many borrowers as possible and address them as soon as possible in accordance with the law.”
what’s next
The department held hearings Tuesday on Mr. Biden’s new debt relief plan, where officials heard from debtors, advocates and experts on how the proposal should shape.
We are currently in the process of selecting a negotiator. Negotiators are nominated by the public and selected by the department, which solicits nominations through the Federal Register. According to the website, negotiators could include “students, student legal aid organizations, higher education institutions, state student grant agencies, surety agencies, lenders, secondary markets, loan servicers, surety agency servicers, collection agencies, state agencies, and accrediting agencies.”
Once established, the Negotiations Committee will hold three meetings at monthly intervals, each typically lasting three days, although the number of meetings may change as negotiations unfold. All committee members must agree to the final rule before negotiators can reach agreement on the proposed debt relief. Once that happens, the department will repost the text of the rule in the Federal Register for public comment and will consider the comments before issuing the final rule.
During rulemaking negotiations, authorities plan to encourage borrowers to resume repayments from October, with interest starting to accrue again in September. To reduce monthly payments for borrowers, there will be a new income-based repayment plan, as well as a 12-month “increase” period during which delinquent borrowers will not be reported to credit agencies.