‘This fight is not over’: What to know about Biden’s new plan to forgive student debt

President Joe Biden doesn’t want the Supreme Court to get the final word on student loan forgiveness.

“This fight is not over,” the president said in a statement shortly after the justices struck down his historic relief plan on June 30.

Later that day, Biden announced he had a new strategy to reduce people’s balances.

“Today’s decision has closed one path,” Biden said during a briefing from the White House. “Now we’re going to pursue another.”

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Here’s what to know.

When the president rolled out his plan in August 2022 to forgive as much as $20,000 in education debt for tens of millions of Americans, he pointed to the Heroes Act of 2003 as his legal justification. That law was passed in the aftermath of the 9/11 terrorist attacks, and grants the president broad power to revise student loan programs during national emergencies.

The Covid pandemic was such an emergency, the administration said. The U.S. Department of Education warned that the crisis had left millions of borrowers in a worse off financial situation and that there could be a historic rise in delinquencies and defaults without its loan cancellation.

Biden’s plan faced at least six lawsuits from Republican-backed states and conservative groups, most of which accused him of executive overreach. At an estimated cost of $400 billion, the policy would have been among the most expensive executive actions in U.S. history.

Two of the legal challenges made it to the Supreme Court: one brought by six GOP-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — and another backed by the Job Creators Network Foundation, a conservative advocacy organization.

It was the states’ case that successfully blocked Biden’s program in the end.

“Six states sued, arguing that the Heroes Act does not authorize the loan cancellation plan,” wrote Chief Justice John Roberts in the majority opinion for Biden v. Nebraska. “We agree.”

″’Can the Secretary use his powers to abolish $430 billion in student loans, completely canceling loan balances for 20 million borrowers, as a pandemic winds down to its end?'” Roberts wrote. “We can’t believe the answer would be yes.”

Instead of the Heroes Act, the White House says that the Education Department will now try to use the Higher Education Act to deliver on student loan forgiveness.

That legislation was signed into law by President Lyndon B. Johnson in 1965, and allows the secretary of Education some authority to waive or release borrowers’ education debt.

Ever since Biden pitched student loan relief while running for president, academics and proponents of student loan forgiveness, including Senate Majority Leader Chuck Schumer, D-N.Y., have called on the president to use the Higher Education Act as his legal justification.

“This puts pressure on the president from his base of support,” higher education expert Mark Kantrowitz said.

During the 2020 Democratic presidential primary, Massachusetts Sen. Elizabeth Warren vowed to forgive student loans in the first days of her administration, including with her announcement an analysis written by three legal experts, based at the Project on Predatory Student Lending at Harvard Law School, who described such a move as “lawful and permissible.”

The basis for their argument: the Higher Education Act.

That same year, Luke Herrine, an assistant professor of law at the University of Alabama, published a paper in the Buffalo Law Review, arguing that the president can cancel a substantial share of student debt with the “compromise and settlement authority” granted under the HEA.

A few reasons.

The Biden administration probably first attempted to carry out its plan with the Heroes Act because it specifically addresses national emergencies. The country was in the middle of one of the biggest public health crises in its history.

When Herrine was writing his paper, ”The Law and Political Economy of a Student Debt Jubilee,” he didn’t consider the Heroes Act as a way to cancel education debt simply because the country wasn’t in an emergency state at the time, he said.

“It’s a statute that’s meant for extraordinary circumstances,” Herrine said.

Another appealing factor was that the Trump administration had used the same authority to pause federal student loan payments at the start of the pandemic, Herrine said.

“There’s precedent, right?” Herrine said. “And indeed it was a Republican administration that did it.”

And because the Heroes Act is an emergency-time measure, it doesn’t require the lengthy rulemaking process that the Higher Education Act typically does (more on that to come).

Biden had hoped to move quickly canceling people’s student debt, promising people the relief within six weeks of them completing their paperwork.

It won’t be speedy, that’s for sure.

Unlike Biden’s first attempt to forgive student debt quickly through an executive order, this time he’s turning to the rulemaking process. That procedure is lengthier, typically involving a public comment period and other time-consuming steps.

“Issuing new regulations can take as long as a year,” Kantrowitz said.

“If the Biden administration is successful in providing loan forgiveness under the HEA,” he went on to say, “borrowers could see forgiveness around the time of the election.”

It’s unlikely that Biden’s Plan B for student loan forgiveness will be successful, Kantrowitz said.

He expects the president’s second attempt at forgiving student debt to be met by many of the same lawsuits as the first. And if those challenges make it to the Supreme Court again, borrowers can brace for déjà vu.

Herrine agreed that was a plausible scenario.

“The Supreme Court is going to be skeptical of basically any interpretation,” Herrine said.

However, he added, “there are a number of ways it could go differently.”

For one, the president didn’t go through the rulemaking process before. “And those are the sort of things that courts are supposed to defer to more,” Herrine said.

During the procedure, the Biden administration may also narrow the scope of his forgiveness plan. For example, he could decide to specify that only those who’ve already been paying their loans for a long time or who’ve repeatedly defaulted, are eligible.

“That would be a relief for a lot of people and I think it would be easier to justify in front of a court that is skeptical of broad authority,” Herrine said.

Even if this round leads to failure again, Herrine doubts the push for student loan forgiveness will fade anytime soon.

“I think we’re going to see more momentum in Congress and maybe some more alternative means to do it,” he said. “It’ll be hard to put the toothpaste back in the tube.”