Biden plots new course to get relief for student borrowers
By The Citizen on June 30, 2023
President Biden on Friday announced new actions to offer student loan borrowers some forgiveness, reintroducing his forgiveness plan grounded in the Higher Education Act (HEA).
Using the HEA to provide student debt relief has been pushed by student loan advocates and top Democrats for years. Under the HEA, advocates argue it allows the education secretary to “compromise, waive or release” students loans. This path will require a public comment and notice period before it could go into effect.
“We need to find a new way, and we’re moving as fast as we can,” he said in remarks at the White House on Friday afternoon.
The administration had tied the student debt relief plan — struck down by the Supreme Court — to the national emergency established during the COVID-19 public health crisis, citing the Higher Education Relief Opportunities for Students (HEROES) Act. Chief Justice John Roberts wrote in the court’s majority opinion, issued Friday morning, that the HEROES Act does not grant the authority.
Biden did not offer further details about who would qualify or how much debt relief borrowers would receive under his new plan to use the HEA, but said Education Secretary Miguel Cardona has taken steps to initiate the rulemaking process.
The department sent out a notice Friday, the first step in the “negotiated rulemaking” process. The first public hearing on the matter will happen July 18 to get input from stakeholders. The process could go well to the end of 2023, but the administration said it will try to move “as quickly as possible.”
“This student debt relief is not being implemented automatically. This is a hot mess. This will be a bureaucratic nightmare,” Braxton Brewington, press secretary for Debt Collective, said in response to the announcement.
The president also announced the administration will launch an “on-ramp” repayment program for borrowers who may miss payments when they resume this fall. It would remove the threat of default or harm to credit ratings because the Education Department won’t refer borrowers who miss payments to collection agencies or credit bureaus for 12 months.
“If you can pay your monthly bills you should, but if you cannot, if you miss payments, this on-ramp temporarily removes the threat of default or having your credit harmed,” Biden said.
Student debt payments have been paused since the pandemic, but in a deal with Speaker of the House Kevin McCarthy (R-Calif.) to secure a debt-ceiling agreement, Biden set in stone the resumption of repayments beginning in October. Interest will begin to accrue again at the beginning of September.