Only a speed bump. That's the attitude that President Biden seems to be taking with the U.S. Supreme Court decision that struck down his student loan forgiveness plan.
The high court's ruling was handed down on June 30, 2023. That same day, the White House announced its backup plan for forgiving student loans.
It's possible that the adverse legal decision truly was only a speed bump. But how long could Biden's "Plan B" take?
Image source: Getty Images.
A lengthy process
Biden's first attempt to forgive student loans used an executive order. That's a quick way for a president to make something happen. He doesn't have that luxury with his backup plan, though.
Now, the White House is going through the rulemaking process to implement its new plan. The Department of Education has already initiated the process. A virtual public hearing on its proposed new rules relating to student debt relief was held on Tuesday.
But that's just the first step in a lengthy process. In his public comments announcing the new approach, Biden admitted, "It's going to take longer."
The next step is a 60-day period for public comments. Once this period ends, the Department of Education must review all comments. In some cases, further analysis will be required. The agency could choose to modify its proposed rule or even issue a new rule after its review.
After this step, the Department of Education has to prepare a draft of its final rule. No final rule can be put into effect until at least 30 days after its publication in the Federal Register.
This entire process could take up to one year. Meanwhile, payments on student loans will be due.
Immediate action
The Biden administration does have another part of its plan, though, that won't take nearly as long. Last week, the Department of Education announced automatic loan forgiveness totaling $39 billion for more than 804,000 borrowers.
This action is different from the rulemaking process described above. It's instead part of a payment count adjustment that the Biden administration first revealed in April 2022.
Borrowers with student debt are eligible for forgiveness under existing regulations after making either 240 or 300 monthly payments, depending on when they first took out their loans. However, there have been some inaccurate payment counts in the past that resulted in some borrowers not receiving forgiveness for their student debt when they potentially could have.
Individuals who qualify for this student loan forgiveness will be notified within the coming days by the Department of Education. Also, the department will continue to notify borrowers who reach the forgiveness thresholds every two months through next year.
Plan C could be needed
To be sure, those who benefit from the quicker action will be the exceptions. There are many more individuals who will still have to wait for the president's plan B to make its way through the rulemaking process. Around 43.5 million Americans have some amount of student debt.
It's possible that borrowers will have to wait longer than just one year. Biden's backup plan, which relies on an interpretation of the Higher Education Act of 1965, will almost certainly be challenged in court. Some legal observers think that the Supreme Court will ultimately block the president's backup plan for student debt forgiveness just as it did his first plan.
If this happens, the president could have to come up with a "Plan C." This plan would likely require Biden to first win reelection to a second term. He'd also need to build enough support in Congress to pass legislation that specifically forgives student debt.
That speed bump the White House is navigating just might be bumpier than anyone in the administration counted on.
