Biden's Plan B For Student Loan Forgiveness Hinges On 1965 Law — But Experts Warn Of Déjà Vu For Borrowers

President Joe Biden’s pursuit of student loan forgiveness suffered a significant setback when the U.S. Supreme Court rejected his historic relief plan on June 30. 

But the president remains determined to find alternatives to alleviate the burden of student debt. In a statement following the court’s decision, Biden said, “This fight is not over.” He subsequently unveiled a new strategy to address the issue during a White House briefing hours later, stating, “Now we’re going to pursue another [path].”

The initial attempt at loan forgiveness faltered because of legal challenges rooted in concerns of executive overreach and the absence of proper legislative authorization. Biden based his plan, unveiled in August 2022, on the Heroes Act of 2003, a law enacted in response to the 9/11 attacks, which grants the president broad powers to modify student loan programs during national emergencies. 

With the current state of student loan debt reaching $1.75 trillion, parents are seeking ways to safeguard their children’s financial well-being. UNest provides a comprehensive solution that empowers families to proactively plan and secure their child’s future. By using UNest’s services, parents can ensure that their children will never have to endure the overwhelming burden of loan debt or experience the turmoil of government policy fluctuations. You can sign up for a UNest account here. 

Biden is shifting his focus to the Higher Education Act (HEA) as the legal foundation for student loan forgiveness. Enacted by President Lyndon B. Johnson in 1965, the HEA grants the Secretary of Education the authority to waive or release borrowers’ education debt. Academics and proponents of student loan forgiveness, including Senate Majority Leader Chuck Schumer, have long advocated for the use of the HEA as the legal justification for debt relief. Higher education expert Mark Kantrowitz noted that this strategy puts pressure on the president from his support base.

While Biden’s previous attempt at executive order-based forgiveness aimed for a swift resolution, the new approach involves a lengthier process of rulemaking. This procedure entails public comment periods and other time-consuming steps, potentially taking up to a year to complete after getting started. Kantrowitz said, “Issuing new regulations can take as long as a year.” If successful, borrowers could witness the effects of loan forgiveness around the time of the next election.

Experts, including Kantrowitz, express doubts regarding the success of Biden’s alternative plan. They anticipate that similar legal challenges to the previous attempt will emerge. In the event that these challenges reach the Supreme Court once again, borrowers may face a sense of déjà vu.

Steven Schwinn, a professor at the University of Illinois Chicago School of Law, voiced concerns over the potential legal challenges that may arise from Biden’s reliance on the HEA for student loan relief. Schwinn stated, “I have no doubt that any relief under the Higher Education Act will face a spate of lawsuits, essentially pitching the same claim — that the administration acted outside of its statutory authority.”

Activists are optimistic about the potential for a more comprehensive approach. Unlike the previous reliance on the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act tied to the national emergency of the pandemic, the HEA offers broader possibilities for debt forgiveness.

Astra Taylor, co-founder of Debt Collective, highlighted the flexibility of the HEA, stating, “Both are totally legal, legitimate authorities. And in fact, the HEROES Act was sort of tailor-made for what we were in, which is a national emergency. ... But the Higher Education Act is broader, and the Debt Collective’s position has always been that it should be used to cancel all student debt.”

Taylor emphasized that the administration has the power to legally wipe out every penny of student debt.