When Will Student Loan Debt Be Forgiven?

President Joe Biden plans to enact federal student loan debt forgiveness through the not-well-known process of negotiated rulemaking.

The Department of Education (ED) will soon gather higher education stakeholders to discuss potential regulatory changes that may grant federal student loan forgiveness to borrowers. ED officially announced its intention to establish a negotiated rulemaking (neg-reg) committee on July 6, so the process has already begun.

The department heard public comments to discuss the committee on July 18.

It’s still unclear just how long the neg-reg process will take. Based on previous rulemaking sessions, Biden’s debt forgiveness plan may be implemented as soon as June 2024 or as late as October 2024, barring another court intervention.

The timeline will become increasingly important as we near the 2024 general election in November.

BestColleges spoke with Clare McCann, a higher education fellow at Arnold Ventures, to discuss the ins and outs of the upcoming negotiated rulemaking process. McCann previously worked as a senior policy advisor for the Department of Education on issues related to higher education.

Negotiated rulemaking is a process federal agencies can utilize to develop new regulations and rules.

The Biden administration has used neg-reg over the past two years to substantially change the federal student loan system and oversight of for-profit institutions. This tool has been in place since 1990, when Congress passed the Negotiated Rulemaking Act, according to the Congressional Research Service.

Any department that wishes to utilize neg-reg must first assemble a committee of stakeholders related to whatever rules the department wants to amend or create. In the case of Biden’s recently finalized income-driven repayment (IDR) plan, for example, the committee included representatives from various colleges and universities, student loan borrowers, and consumer advocacy groups.

The department proposes language for a regulatory change, and negotiators then debate the merits of that proposal. They may suggest their own changes.

Negotiators use the last week of rulemaking to vote on proposed rules one final time. If all negotiators vote in favor of the proposal, consensus is reached and the rule will move forward as is. If even one member disagrees, however, then the department can propose any final regulation it chooses in the following months.

McCann told BestColleges that the next step in Biden’s debt forgiveness process would be for ED to put together a committee of negotiators.

That first involves publishing a request for people to submit nominations for negotiators, which usually lasts about 2-3 weeks, she said. The department would then vet and select those negotiators and formally invite them to the first rulemaking session.

Because the department has already filed its intent to form a negotiated rulemaking committee, ED may release its request for nominations any day now, McCann said.

Once it does so, the process moves quickly.

ED has established two neg-reg committees under the Biden administration. The department sought nominations for the first committee on Aug. 10, 2021, and convened the first session on Oct. 4, 2021, McCann said. ED sought nominations for the second committee on Dec. 8, 2021, and convened the committee on Jan. 18, 2022.

That means, depending on when ED requests nominations, negotiations may begin as soon as September if the department moves quickly.

ED ultimately holds all the power in who will be on the committee. McCann said that while the Higher Education Act includes recommendations on the types of negotiators the department should include in neg-reg, it doesn’t contain a checklist of required negotiating slots.

Historically, actual negotiations take a little over two months.

Negotiators will generally meet Monday through Friday once per month. For example, if negotiators meet the first week of September, they will again meet the first week of October and the first week of November.

However, this upcoming neg-reg may be different.

Past neg-regs have tackled many regulatory changes. The negotiations that ended in December 2021, for example, included 12 issue papers that had to be voted on.

McCann said ED may expedite this federal student loan debt forgiveness process if it sticks to covering this single issue. The department likely won’t need as much time to revise proposed language between sessions, so negotiators may have just a week or two between sessions, rather than a full month.

“The administration could opt to speed up the timeframe for negotiations,” she said. “The primary reason for that time between sessions is so that ED can revise the proposed language between sessions based on the feedback from negotiators, and so negotiators can meet with their constituencies and further develop their proposals.”

Negotiations will be virtual, allowing the department to be more flexible with timing.

The post-negotiations period has no clear timeline, but expect the process to take a few months.

The department generally requires several months to produce the draft regulations for publication in the Federal Register, McCann said.

ED must not only finalize the regulations but also write a preamble, she explained. The preamble explains and justifies each component of the regulation. It must also include an estimated cost of the proposed rule and a paperwork burden estimate.

The process may be slightly quicker if negotiators reach consensus on language, as that means ED wouldn’t be permitted to make extensive revisions to the language before publication.

Still, McCann said the entire process will likely take a few months.

Once published, the public will likely have 30 days to comment on the proposal.

The department must then review and respond to all “substantive” comments before publishing the final regulation. McCann said this will require “several additional months” beyond the end of the public comment period.

This all means that after negotiations are completed, it will likely take over five months before ED is ready to finalize any rule.

There are two important days to keep in mind: Nov. 1 and July 1.

Any federal agency must publish its rule before Nov. 1 of any given year for it to go into effect on July 1 of the following year. ED does not have nearly enough time to finalize its rule before Nov. 1, 2023, so it will instead need to beat the Nov. 1, 2024 deadline. Then debt forgiveness will be finalized on July 1, 2025.

That may seem like a ways away, but McCann said the rule may not be official until mid-2025 but can be implemented early.

The department can generally implement early regulations, provided it is on a voluntary basis on the part of outside entities, she said.

Because the regulation would impact borrowers, borrowers then may be able to opt into debt forgiveness early. ED would need to set up a method for borrowers to do this. But conceivably, borrowers would be able to apply for debt forgiveness soon after the final rule is published, even if it won’t be official until July 2025.