Whatever happened to mass student loan relief? Biden faces pressure to extend negotiations (2024)

Advocates for student loan relief are pressuring the government to move more swiftly toward a solution that will help people experiencing hardship overcome unmanageable debt.

Their demands, in a letter Thursday, come after the Supreme Court struck down President Joe Biden’s plan for mass student loan forgiveness last year. Upon that decision, the administration quickly turned to an alternative strategy for securing that relief.

The “Plan B” involved a process called “negotiated rulemaking,” or “neg reg” for short. The process entailed discussions over several months among a committee of various stakeholders who deliberated changes to federal higher education law that could enable relief for broad categories of borrowers.

The final neg reg session took place in December, and many of the negotiators – including borrowers and advocates – left the meetings unsatisfied. Now, a coalition of 67 organizations representing students such as people of color, veterans and individuals with disabilities is calling on the administration to schedule a fourth session and hash out a rule that would forgive the debt of borrowers experiencing hardship.

“We cannot allow bureaucratic processes and timelines to serve as a barrier to desperately needed relief for the American people,” reads the letter, issued Thursday. “The Department cannot wait until it is too late; it must act now and establish a fourth rulemaking session to ensure the promise of student debt cancellation happens swiftly as we embark upon a new year.”

What is the status of student loan debt relief?

After much anticipation and a years-long pandemic-era payment pause, Biden in 2022 unveiled his plan for mass student loan forgiveness: More than 40 million borrowers would be eligible for between $10,000 and $20,000 in relief. The difference in relief a person could seek would depend on whether they were low-income students who received Pell grants to attend college. About 26 million borrowers applied or were automatically deemed eligible, and more than 12 million had been approved before legal challenges put the effort on hold.

By the following summer, that initiative was quashed by the Supreme Court. But the administration had a backup plan: The Department of Education would leverage the Higher Education Act of 1965, utilizing the neg reg process to adjust the law and enable relief in a more piecemeal fashion.

Those neg reg sessions kicked off in July, and negotiators were charged with deliberating rule changes and potential relief options for various categories of borrowers. They include borrowers whose balances have snowballed to amounts that exceed the original amount they took out and borrowers who hadn't applied for relief but would be eligible under existing options, such as Public Service Loan Forgiveness or income-driven repayment.

The draft rules the department released in December, based on the preceding neg reg sessions, included relief for borrowers whose interest caused their loan balances to balloon, borrowers who hadn’t signed up for forgiveness but were eligible and borrowers who’d been in repayment for decades.

But there were lots of caveats baked into the proposals, and negotiators weren’t happy. “This isn’t broad enough,” Sherrie Gammage, a committee member representing borrowers who attended four-year colleges, said during the December neg reg session.

Student loan relief: 'Neg reg' talks end without a final answer on who should get help

What does the letter say?

The letter to Education Secretary Miguel Cardona Thursday was signed by 67 organizations, including Young Invincibles, the National Consumer Law Center, the NAACP and the National Education Association.

It calls for a fourth neg reg session so the department can develop a “robust rule” ensuring relief for borrowers experiencing hardship. Research has shown many student loan borrowers undergo economic hardship, and that this hardship is exacerbated by the loans, which reduces their ability to buy homes, save for retirement and invest in their families.

“In response to the Department’s questions, negotiators worked tirelessly and in good faith to provide the Department with comprehensive proposals,” the letter reads. But the government has not come through on its promise, the authors said. "Failing to finalize a proposal to provide relief for borrowers experiencing hardship would result in millions of borrowers – including most recent graduates, many low-income borrowers, borrowers of color, and borrowers with disabilities – being left out of the necessary debt relief. This cannot be an option.”

What are Biden's next steps on student loan forgiveness?

A department spokesman declined to comment on the record but acknowledged officials had received and will review the letter. The department continues to pursue relief student loan debt for as many borrowers as possible, in as timely a fashion as possible, including through regulation changes, the spokesman indicated.

Adding another neg reg session is not out of the question. Generally speaking, a regulation needs to be finalized by November in a given year for it to take effect the following summer. Given dissatisfaction with the latest proposed rules and the upcoming presidential election, more rulemaking could be likely.

Beyond that regulatory process, the Biden administration has been working to relieve the student loan debt of other borrowers already deemed eligible for such forgiveness as a result of separate legal or administrative developments.

For example, last summer education officials announced they would provide automatic relief to 804,000 borrowers after making fixes to calculations on income-driven repayment plans. The government has also helped secure relief for thousands of borrowers who attended colleges, often for-profit ones, that misled or defrauded students through a policy known as borrower defense to repayment.

804,000 borrowers get relief: Student loan debt forgiveness becomes a reality for those who'd paid for decades

But these efforts have been met with legal challenges at nearly every step. Critics of student loan forgiveness say it’s a handout, and that borrowers should be held responsible for what they signed up for when they decided to go into debt for their education.

"Student loan borrowers are throwing a temper tantrum about having to repay their loans after a three-and-a-half-year payment holiday,” Elaine Parker, president of Job Creators Network Foundation, said in a statement Wednesday in response to coverage suggesting some borrowers had boycotted their payments. “President Biden is largely responsible for these young adults' bad decisions because he has continually given them false hope that their loans will eventually be canceled."

Parker berated the White House's stance, noting that, "In violation of the Supreme Court decision striking down its student loan bailout, the Biden administration has lawlessly pursued workarounds to forgive debt for millions of borrowers. Many borrowers hope their turn will be next, but they risk financial ruin by taking this gamble.”

Parker said pressure should instead be placed on colleges to reduce the cost of attendance. Average tuition rates have steadily risen in the past few decades; however, the hikes in the past several years have not outpaced inflation.

And while there are more federal student loan borrowers ages 25-34 than in any other age group, borrowers in their mid-30s and 40s account for the largest share of outstanding student loan debt.Roughly 1 out of every 4 federal dollars lent for undergraduate education, meanwhile, goes to parents.

As demonstrated in a report published Wednesday by New America, a left-leaning think tank, roughly 1 in 6 federal student loan borrowers are in default on their loans. Millions of those borrowers have continuously been in default for at least seven years.

Contact Alia Wong at (202) 507-2256 or awong@usatoday.com. Follow her on X at @aliaemily.