President Joe Biden’s second attempt at student loan cancellation is making progress as hearings begin to negotiate the details of a new plan. The hearings, part of a process called negotiated rulemaking, will involve 14 individuals selected by the Biden administration. The goal is to guide the Education Department in developing a proposal after Biden’s first plan was rejected by the Supreme Court.
The negotiators come from diverse backgrounds and represent various perspectives on student loans. The panel includes students, college officials, loan servicers, state officials, and advocates such as the NAACP. Biden directed the Education Department to find an alternative path to loan relief after the court ruled against his ability to cancel loans using the HEROES Act.
The new plan will rely on the Higher Education Act, which grants the education secretary the authority to waive student loans. However, there is ongoing legal debate about the extent of this power. Through the negotiated rulemaking process, the department aims to modify or add federal rules that clarify how the secretary can cancel debt.
The eligibility criteria and amount of relief under the new plan are yet to be determined. These details will be decided after the administration receives input from the negotiators during a series of sessions scheduled to continue until December.
After the negotiation process, the proposed rule will be voted on by the negotiators. If a consensus is reached, the department will move forward with the proposal. If not, the agency will propose its own plan, which can be finalized after a public comment period.
Negotiated rulemaking is a routine process used by the Education Department to enact federal regulations, especially related to student financial aid. However, it often concludes without consensus among negotiators and can be time-consuming.
Biden’s objective is to assist as many borrowers as possible, but the scope of the new plan is not yet clear. His initial proposal would have canceled up to $20,000 in federal student loans for borrowers with incomes below certain thresholds. Republicans opposed this cancellation, arguing that it would provide unfair benefits to college graduates at the expense of taxpayers who did not attend college.
The administration plans to finalize the new rule next year, although Education Secretary Miguel Cardona has not confirmed if it will be in place before the next presidential election. Cardona acknowledged that the Supreme Court’s ruling would influence their approach to the issue.
Legal analysts view the court’s decision as a rejection of mass loan cancellation without legislative action. The court emphasized that the education secretary’s power is limited to making adjustments and additions to existing provisions, rather than transforming them.
To guide the negotiators, the Education Department has released an issue paper outlining key questions for debate. While it does not provide explicit details about the department’s vision for loan cancellation, it identifies five groups of borrowers who may require relief.
These groups include borrowers whose interest has significantly increased their balances, those who are eligible for existing income-driven repayment plans but have not applied for them, borrowers who attended college programs that did not lead to sufficient earnings for loan repayment, borrowers with older loans predating relevant benefits, and those facing hardships not addressed adequately by the current student loan system.
The paper also prompts negotiators to discuss factors that would warrant loan cancellation, such as equity, good conscience, or financial hardship.
President Biden has emphasized the issue of growing interest rates, noting that many graduates continue to owe more than their initial borrowing amount due to interest. The administration is committed to delivering student debt relief as quickly as possible.
The negotiators will meet virtually for two-day sessions scheduled in October, November, and December.
In conclusion, President Biden’s second attempt at student loan relief is making progress through a series of negotiations. The goal is to formulate a new plan under the Higher Education Act after the Supreme Court rejected Biden’s initial proposal. The details of eligibility and relief amounts are yet to be determined, and the negotiation process will play a crucial role in shaping the final rule. The administration aims to assist as many borrowers as possible while considering various perspectives on this issue. The process is expected to take time, but the goal is to provide much-needed relief to borrowers burdened by student loans.
