Biden has another plan for mass student loan forgiveness. It could be excruciatingly long

Last summer, in the space of about 20 minutes, President Joe Biden laid out his plan to forgive student loan debt for more than 40 million borrowers.

On Tuesday, roughly a year later and with that plan undoneby the Supreme Court, a very different process for erasing debt on such a wide scale begins. It’s expected to take several months, if not longer. The resulting rule may also face legal challenges, which could drag things out further.

The administration is leveraging the country’s primary higher education law to write a regulation that will allow the government to cancel some student debt.

Much is unknown about exactly what the process will look like and how far a new loan forgiveness plan would go, although the undertaking will be familiar to higher education experts.

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In any case, what’s typically a sleepy process only insiders follow is expected to garner unprecedented attention – and the stakes are high.

This is a rough guide to how things might unfold.

What is ‘negotiated rulemaking’?

The process the Biden administration has turned to is called negotiated rulemaking, “neg reg” or “reg neg.” It’s been used many times over the years to draft rules related to higher education on everything from how Title IX law on sexual assault is applied at schools and colleges to how well colleges produce graduates whose jobs can cover their student debt. Other federal agencies use a similar process to write regulations.

Before COVID, these rulemaking sessions generally took place in D.C. office buildings, with few observers looking on. Now, they are livestreamed. Given the subject, far more people may take notice than at any time in the past. To watch Tuesday’s session, which is scheduled to begin at 10 am Eastern time, sign up at this link.

The neg reg process is “something that in the past that has not gotten a lot of attention,” said Rebecca Natow, an assistant professor at Hofstra University in New York who has written a book about it. “This one is going to be so high-profile.”

Tuesday’s event will kick off the way these negotiations typically do: with input from the public. The meeting is an opportunity for about five dozen people, in four-minute increments, to tell the federal Education Department what they think officials should focus on as they deliberate on student loan debt forgiveness. In addition, anyone can submit comments online for a few more days. As of Monday evening, about 10,000 comments had already been shared with the Education Department. These are all likely to be considered as the process continues.

The Education Department’s James Kvaal will be among the first speakers, and he’s expected to note how quickly the administration went from announcing it would undertake this process on June 30 to actually beginning it.

“Today – less than three weeks since President Biden announced actions to open a new path to provide debt relief to as many borrowers as possible – we are taking an important step forward: to improve our regulations on the secretary’s authority under the Higher Education Act to compromise, waive, or release federal student loans,” he will say, according to prepared remarks. “Our goal is to provide debt relief to borrowers, particularly those working- and middle-class borrowers who need it most. To recognize that far too many student loan borrowers are left with unaffordable, unreasonable, and unacceptable debts.”

After Tuesday, the Education Department will issue a call for people to be a part of the committee that will work together to write the regulation.

These negotiators will represent different groups who have a stake in student loans, such as borrowers, student loan servicers – the agencies that manage borrowers’ accounts, colleges and universities and so on. Not everyone will be sympathetic to the cause.

Then the talks begin.

The big hitch: This group of people has to agree – all of them – on what the regulation should say. If they don’t, Education Department officials can essentially take over and write the regulation themselves.

“That’s an incentive for people to compromise,” said Betsy Mayotte, president of the nonprofit president of the Institute of Student Loan Advisors, who has served on negotiated rulemaking committees on past topics. Even if they don’t, it’s likely the Education Department would consider how negotiators felt.

How long could this take?

A long time. Months or even years. It could take so long it would stretch into the next administration, and depending on who is running the White House then, there could be an effort to undo it.

“Debt forgiveness coming out of the president’s campaign promise is not going to happen anytime soon,” said Alison Griffin, a senior vice president at Whiteboard Advisors and a former adviser to the chair of the U.S. House Education and the Workforce Committee.

That’s because rulemaking generally adheres to a rigid schedule. Usually, it takes weeks or even months to figure out who will be on the committee along with a set of backup negotiators. Then they have to meet a few times, and those meetings are several weeks apart.

“There has to be sufficient time for negotiators to come to an agreement as well,” said Robert Kelchen, a professor and head of the Department of Educational Leadership and Policy Studies at the University of Tennessee, Knoxville. “If they don’t give what’s viewed as adequate time for that, it could open the door to challenges.”

Typically, a regulation would have to be sorted out by November to take effect the following July, and even a motivated Biden administration agency would likely be unable to achieve that.

While there are options for fast-tracking the process, Natow said, a regulation that provides loan forgiveness in 2024 is a long shot.

How far could loan forgiveness go?

Biden’s now defunct plan promised to cancel up to $20,000 in loan debt for low- and middle-income borrowers. It would have reached more than 40 million people had they all applied – and 26 million did before the courts intervened.

Experts said it’s hard to imagine a plan that doesn’t rival that earlier pledge. That’s in part because a number of programs already exist that forgive the loans of people who work in the public sector or have paid down their loans for decades.

“They either want to go big, or they want the perception that they’re going big,” Kelchen said.

Neg reg: ‘Democracy at its best’?

This isn’t the first effort to use HEA as a vehicle for student loan cancellation. Back in 2021, Democratic Sens. Elizabeth Warren of Massachusetts and Chuck Schumer of New York, along with Rep. Ayanna Pressley (D-Mass.), introduced legislation urging Biden to go the HEA route.

But the effort didn’t get far. As with Biden’s Plan A for mass forgiveness, the neg reg approach is legally treacherous at a time of fierce opposition in some pockets to any form of broad student loan cancellation.

And again, the process is long and complicated. One rationale behind Biden’s original loan forgiveness plan – which used a law known as the HEROES Act that gives the president some discretion on student loan payments during national emergencies – was the expedited nature of that route. The HEA requires negotiated rulemaking to adjust the law; the HEROES Act does not, Natow noted.

Even if department officials already have an agenda in mind – and experts say they likely already do – they need to go through the motions of hearing testimony and building a committee and tapping negotiators. Then they need to present the proposed rule for public comment.

All the components mean this process will likely extend beyond Nov. 1, the deadline for publishing a rule before it goes live the following July. “There is no way that by July 1, 2024, we will have a rule in place,” Griffin said, “because there’s no way we’ll have a (proposed) rule in place by November 1, 2023.”

Given the protracted timeline and the possibility of a different political party running the White House after next year, HEA-based mass loan forgiveness may never see the light of day.

But the process is necessary, some observers say, especially at a time of intense partisan divides on forgiveness.

To forgive or not to forgive?As Supreme Court gears up to rule on student loan cases, Americans are split on debt forgiveness

“It’s democracy at its best,” said the Institute of Student Loan Advisors’ Mayotte. “If it works the way it’s intended, to me, it’s the fairest way to write regulations.”