Biden administration teases new student loan forgiveness plans as repayments begin

The Department of Education is studying new ways to cancel student loans as payments begin this weekend.

Federal student loans have not accrued interest since March 2020 but will begin doing so again on Oct 1. Meanwhile, the Biden administration is moving forward on a series of new initiatives announced since the Supreme Court struck down its $400 billion student debt transfer in June.

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“The work of the Biden-Harris administration will make sure that student loans aren’t a barrier to opportunity, restore the promise of post-secondary education, and help build a stronger economy,” Undersecretary of Education James Kvaal said on a call with reporters.

The original student loan forgiveness plan rested on the HEROES Act of 2003, which was written with Iraq War veterans in mind, to cancel loans on the legal premise that the pandemic constituted a national emergency. That was struck down by the high court over the summer.

But a DOE release says the department is looking at using a different law, the Higher Education Act of 1965, to achieve similar ends.

A highlighted portion of that law reads, “in the performance of, and with respect to, the functions, powers, and duties, vested in him by this part, the Secretary [of Education] may enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.”

Many student loan forgiveness champions had urged President Joe Biden to use the Higher Education Act in the first place, and some were upset that he didn’t.

A new program is likely to have different particulars, but the goal seems to remain the same.

“The department also is considering adding regulations on the circumstances under which the department may waive all or part of federal student loan debts,” the DOE release reads.

The Biden White House has charged ahead in the face of the Supreme Court setback, announcing a series of new moves and bragging that it has canceled more student debt than any other administration. It has announced an income-driven repayment program that would see most new loans forgiven after no more than 20 years and canceled debts for existing IDR payments by including months where payments were not made toward completion of the program.

Opponents of debt forgiveness say the moves aim at the wrong problem.

“Borrowers facing renewed student loan bills in October should join with JCN to demand colleges dramatically reduce their prices,” said Alfredo Ortiz, president and CEO of Job Creators Network. “As a first step, legislators should haul college presidents before Congress to explain their outrageous tuition hikes that have saddled so many Americans with huge debts.”

Ortiz says all of the DOE’s initiatives will “give colleges a blank check” to continue raising tuition on the backs of borrowers.

The new programs may be more narrowly targeted, however. DOE says it’s focused on debtors whose balances are greater than what they originally borrowed, those with loans that were taken out decades ago, those whose college experience “did not provide sufficient financial value,” those who are eligible for relief programs but have not applied, and those who have “experienced financial hardship and need support.”

The department has formed a Student Loan Relief Committee to meet and discuss the ideas. Committee members include civil rights organizations, state attorneys general, a collection of schools, loan servicers, students, and military veterans.

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Repayments will begin next week even if there’s a government shutdown, though the department has said things could change if the shutdown lasts for longer than a few weeks. But many borrowers may continue to hope that at least some of their debt will be written off and transferred to taxpayers.

“We’re not going to rest until we fix our broken student loan system,” Kvaal said.