In an effort to salvage its student debt relief program struck down by the Supreme Court last year, the Biden administration is taking new steps to extend debt relief to borrowers experiencing financial hardship.
On Wednesday, administration officials said they will host a rule-making session next month to determine what constitutes hardship, an effort advocates hope will deliver expansive loan forgiveness.
Defining financial hardship became a major point of contention during negotiations to craft a new regulation after the Supreme Court ruled in June that President Biden had exceeded his authority in canceling roughly $400 billion in student debt. The Education Department convened a panel of higher education experts in the fall to make recommendations, but the department failed to produce a plan before disbanding the group in December.
Now the department is making good on a promise to host another meeting to discuss what should constitute hardship. The session will be held on Feb. 22 and 23, with an opportunity for the public to comment at the end of the first day. Negotiators and the public will receive a draft of the regulation at least a week before the meeting, according to the department.
“The Biden-Harris Administration will never stop working to deliver student debt relief for borrowers,” Undersecretary of Education James Kvaal said in a statement Wednesday. “We look forward to discussing another avenue for borrower relief related to hardship at our next negotiation session.”
A source familiar with the agency’s plans said it probably will discuss the specific circumstances or characteristics of borrowers who could receive loan forgiveness under this category. The person, who spoke on the condition of anonymity because they were not authorized to discuss the matter publicly, said the department is working to identify pathways to debt relief for as many borrowers as possible without running afoul of the Supreme Court.
Wednesday’s announcement comes a week after a group of liberal lawmakers, led by Sen. Elizabeth Warren (D-Mass.), urged Education Secretary Miguel Cardona to reconvene the rule-making panel to address the hardship issue.
“The Biden Administration must continue to use its authority to deliver on the promises made to student loan borrowers and hold a fourth negotiated rule-making session, as quickly as possible, to complete discussion of hardship-based relief-and once complete, swiftly propose and implement debt relief for millions of hard-working Americans,” the lawmakers wrote.
The lawmakers joined a growing chorus of advocates and student activists calling on the administration to take action. A week before the letter from Warren and her colleagues, more than 60 organizations wrote to the secretary about the hardship matter. Many believe the hardship category could capture a larger swath of people than the other categories included in a proposal released by the Education Department in October.
The agency’s initial proposal focuses on select groups of borrowers: those who owe far more than they originally borrowed because of interest; those who have been paying for at least 20 or 25 years; those who attended career training programs that led to high debt loads or low earnings; and those who are eligible for existing forgiveness programs but never applied.
The panel of education experts found common ground with the department on facets of the agency’s proposal, including a provision to provide loan forgiveness to people who attend schools with high default rates or that consistently leave students with unaffordable debt. However, borrowers and consumer attorneys on the committee were vehemently opposed to capping forgiveness at $10,000 — the amount of relief the department proposed for all borrowers whose balances have ballooned because of interest.
On Wednesday, the department said it is drafting rules covering myriad matters discussed during negotiations. It must move forward with the provisions that negotiators agreed upon, it said, but plans to come up with its own solution for the provisions that left the panel divided.