Public Offers Suggestions for a New Student Loan Forgiveness Plan

President Joe Biden’s administration took the first step in its new federal student loan debt forgiveness plan Tuesday.

Representatives from the Department of Education (ED) heard public comments Tuesday offering suggestions for how the department should implement any new debt forgiveness program through negotiated rulemaking.

The listening session included advocates both in favor and opposed to debt forgiveness, as well as a litany of everyday student loan borrowers campaigning for relief from heavy debt burdens.

ED Undersecretary James Kvaal started the listening session by reiterating the administration’s resolve to enact blanket debt forgiveness.

“I want you all to know that … we are not going to stop fighting for student loan borrowers,” Kvaal said. “We are committed to using every tool we have to provide borrowers with the relief they need.”

The public has until July 20 to submit written comments regarding ED’s plan to enact debt forgiveness through negotiated rulemaking.

ED will then assemble a team of negotiators representing various stakeholders that any regulatory changes would impact. The negotiators will then work for three months to reach consensus on a plan, but the department has the last say in any proposal.

A common pitch among student borrower advocates was for ED’s next debt forgiveness plan to mirror Biden’s initial pitch from August 2022.

Biden’s first plan would have forgiven up to $10,000 in federal student loans for all borrowers making less than $125,000 per year, or couples making less than a combined $250,000. People who received at least one Pell Grant while in college were eligible for up to $20,000 in total loan forgiveness.

Melissa Byrne, executive director of We the 45 Million, said no borrowers promised relief in August 2022 should be excluded from this next proposal.

“That is the floor,” Byrne said.

U.S. Rep. Maxwell Frost, a Democrat representing Florida, highlighted that President Biden inspired hope for many borrowers with the initial plan, so he must work to keep that promise.

“This is a very important program that so many of my constituents are excited about,” he said.

The floor for forgiveness may be $10,000-$20,000, but many commenters pushed ED to go further with Plan B.

India Heckstall, a senior policy analyst at the Center for Law and Social Policy, said ED should increase the maximum forgiveness to $50,000. Doing so would help the most disadvantaged borrowers, particularly Black students who have historically had to borrow more than white students.

Another sticking point concerned Parent PLUS borrowers.

Peter Granville, a fellow at the Century Foundation, said forgiveness should be more generous for Parent PLUS loan borrowers than under the initial plan.

Biden’s first student loan forgiveness plan proposed $20,000 in debt cancellation only for people who received a Pell Grant. Parent PLUS borrowers who never went to college could only qualify for up to $10,000 in forgiveness, even if their child qualified for a Pell Grant.

Granville suggested that ED’s next plan allow these Parent PLUS borrowers to qualify for $20,000 if the student whose education they are paying for received a Pell Grant.

Not all commenters were fans of ED’s plan to use negotiated rulemaking to achieve debt relief.

Mark Chenoweth, president of the New Civil Liberties Alliance nonprofit, said the U.S. Supreme Court would likely strike down this action, just as it did with the president’s initial proposal. The New Civil Liberties Alliance represented a plaintiff in 2022 that sought to block Biden’s plan.

Chenoweth added that nonprofits should be included in negotiated rulemaking because the plan will impact their ability to recruit talent through the Public Service Loan Forgiveness (PSLF) program.

Karen Harned, chief legal officer at the Job Creators Network Foundation, shared the belief that carrying out debt forgiveness through negotiated rulemaking is illegal.

The Job Creators Network Foundation also sued the department over its initial debt forgiveness plan. Its lawsuit made it to the U.S. Supreme Court, but it was ultimately thrown out due to lack of standing.

Harned agreed that federal student debt is a crisis for many borrowers. However, she said the Biden administration should instead work with Congress to address the underlying issues with the student debt system.

“The inflation for college tuition is unmatched, unstable, and we believe unfair,” Harned said. “Student forgiveness is nothing more than a Band-Aid.”

Student loan borrowers offered support for the debt cancellation plan throughout Tuesday’s hearing.

Many spoke about how they were taught from a young age that a college education was necessary to achieve the American dream. It was only after accumulating tens of thousands, sometimes hundreds of thousands, of dollars in debt that they truly understood the gravity of its long-term effects.

One borrower spoke about how his loan balance has ballooned by over 50% over 20 years due to accumulating interest.

He said he feels like he’s in a form of “indentured servitude” due to this burden.

Another borrower spoke about how her debt has grown from $130,000 to $150,000 over 11 years. She said the payment pause has been a life raft over the past three years, and she hopes debt forgiveness will allow her to get on track for repayment.