The Supreme Court might strike down President Joe Biden\u2019s sweeping student debt relief plan in the coming weeks \u2014 but the more than 40 million borrowers eligible for up to $20,000 in loan cancellation could still have hope if the White House pursues a \u201cPlan B.\u201d<\/p>\n
The Higher Education Act, or HEA, could unlock an alternate route for broad student debt cancellation. Signed by President Lyndon B. Johnson in 1965, the landmark legislation laid the foundation of the modern U.S. college funding system. It established and governs grants, federal loans and other programs to help students pay for school, and it empowers the secretary of education to \u201ccompromise, waive, or release\u201d federal student loans.<\/p>\n
The HEA \u201chas changed over time to reflect the needs of society,\u201d says Twinette Johnson, a law professor and interim dean at the University of the District of Columbia School of Law. But even as the HEA has expanded, Johnson says, it must continue to serve its core purpose: \u201cto make higher education more accessible and to remove the blocks that may impede that access.\u201d<\/p>\n
But the White House hasn\u2019t yet announced a student debt cancellation Plan B via the HEA or otherwise \u2014 so borrowers should prepare as if bills will resume on their total loan balance, sans relief.<\/p>\n
Related<\/strong>: What the Supreme Court\u2019s decision to let $6 billion in student-loan relief move forward means for borrowers<\/p>\n Two major lawsuits currently pending a\u00a0Supreme Court ruling\u00a0have derailed Biden\u2019s Plan A, which would cancel debt via the Heroes Act of 2003. Passed by Congress in the wake of the 9\/11 attacks, this law allows the secretary of education to \u201cwaive or modify\u201d student debt obligations for borrowers affected by a war, military operation or national emergency. In August, the White House argued that the pandemic was a national emergency worthy of loan cancellation.<\/p>\n Though the HEA allows the secretary to \u201ccompromise, waive, or release\u201d federal student loans, it doesn\u2019t include specific requirements like a national emergency.<\/p>\n The government has called on the HEA to cancel student debt before, albeit in narrower cases. It allowed policymakers to roll out Public Service Loan Forgiveness and income-driven repayment programs, which erase student debt after eligible borrowers make payments for a set number of years. Around 615,000 borrowers were approved for $42 billion in loan forgiveness under the PSLF program between October 2021 and May 2023, the Education Department said.<\/p>\n The HEA was also behind the recent $6 billion\u00a0Sweet v. Cardona settlement, in which some 300,000 borrowers who\u2019d been defrauded by their schools will get their debt discharged and past loan payments reimbursed, says Luke Herrine, an assistant law professor at the University of Alabama and former legal director of The Debt Collective, a debtors\u2019 union fighting for student loan cancellation.<\/p>\n Read<\/strong>: White House budget assumes student-debt forgiveness will move forward<\/p>\n If Biden\u2019s debt cancellation plan went through the Higher Education Act instead of the Heroes Act, the legal rollout could look different.<\/p>\n There are several plausible scenarios, explains Herrine. If the Department of Education invokes the HEA\u2019s \u201ccompromise and settlement authority,\u201d it might need to issue a regulation, which would require a long, negotiated rulemaking and notice-and-comment period, he says.<\/p>\n \u201cThat usually takes over a year to do, and it would be subject to judicial review and so on,\u201d Herrine says. Congress could also step in and block the regulation via the Congressional Review Act.<\/p>\n Alternatively, the Department of Education could issue an order, which is a \u201cquasi-judicial act,\u201d says Herrine. \u201cThat would potentially be subject to judicial challenge, but it would not be subject to the Congressional Review Act, and it would not require over a year of rulemaking.\u201d<\/p>\n Either choice requires a slew of administrative law processes, says Herrine, but if the Department of Education is already preparing for a negative Supreme Court decision, it may be able to move quickly.<\/p>\n Ultimately, a Plan B success story could hinge on speed: \u201cIt\u2019s harder for the court to undo cancellation than it is to prevent it in the first place,\u201d adds Herrine.<\/p>\n So far, the Biden Administration continues to stand behind Plan A \u2014 the Heroes Act \u2014 and has not publicly offered up any debt cancellation Plan B.<\/p>\n \u201cOur Administration is confident in our legal authority to adopt this plan, and today made clear that opponents of the program lack standing to even bring their case to court,\u201d said Secretary of Education Miguel Cardona in a statement immediately following the Feb. 28 Supreme Court oral arguments.<\/p>\n Some activists echoed this call. \u201cWe are hyper-focused on making sure that this plan as enacted by the president happens,\u201d said Cody Hounanian, executive director of the Student Debt Crisis Center, a nonprofit borrower advocacy organization, after oral arguments. \u201cWe\u2019re not engaging the administration on any type of Plan B yet. We think [Biden] has taken the right action.\u201d<\/p>\n Don\u2019t miss:<\/strong> Conservative think tank asks court to immediately halt student loan payment pause<\/p>\n But even the president has expressed doubt on how the justices would rule: \u201cI\u2019m confident we\u2019re on the right side of the law,\u201d Biden told reporters on March 1. \u201cI\u2019m not confident about the outcome of the decision yet.\u201d<\/p>\n Nobody has a crystal ball, but some experts remain hopeful that a Supreme Court decision against the current plan would not spell doom for broad student debt cancellation.<\/p>\n \u201cThe administration has done so much good work, especially targeting vulnerable student borrowers,\u201d says Betsy Mayotte, founder and president of The Institute of Student Loan Advisors, a nonprofit organization that offers free guidance to borrowers. \u201cI think that if there\u2019s a way to have a Plan B, they\u2019ll aggressively try to do it.\u201d<\/p>\n This doesn\u2019t mean borrowers should count on debt cancellation yet, says Mayotte. Under current guidance,\u00a0federal student loan bills will resume\u00a060 days after June 30, or 60 days after the Supreme Court posts its final opinion \u2014 whichever comes first.<\/p>\n \u201cPrepare for the worst and hope for the best,\u201d Mayotte advises. \u201cMake sure you know where your loans are, make sure you know what your payments will be when they resume. If they won\u2019t be affordable, now is a great time to look at different payment options.\u201d<\/p>\n Don\u2019t wait for a Supreme Court decision; take action now. Reach out to your\u00a0federal student loan servicer\u00a0to learn about the relief available to you. Options like an income-driven repayment plan can lower your monthly payments once they restart and forgive your remaining debt after you make 20 or 25 years of monthly payments \u2014 no Plan A or B needed.<\/p>\nThe HEA\u2019s debt cancellation history<\/strong><\/h2>\n
Legal roadmap could differ<\/strong><\/h2>\n
Will Biden pursue a Plan B for student debt cancellation?<\/strong><\/h2>\n