Biden Outlines Next Steps for Student Debt Cancellation and Repayment Plans

By Hugh T. Ferguson, NASFAA Senior Staff Reporter

Despite a fatal blow from the United States Supreme Court, President Joe Biden doubled down on his efforts to carry out his student loan debt cancellation program on Friday and announced that the Department of Education (ED) would instead pursue implementing the plan through the negotiated rulemaking process.

The change in tactics comes on the heels of the United States Supreme Court’s decision to block the program after determining that the White House lacked the authority to implement it through the Higher Education Relief Opportunities for Students (HEROES) Act of 2003.

“I'm announcing a new path to provide student debt relief to as many borrowers as possible, as quickly as possible, grounded in the Higher Education Act,” Biden said on Friday afternoon. “Just moments ago, Secretary Cardona took the first official step to initiate this new approach. We aren’t wasting any time.”

According to Biden, this new pathway will take longer to implement and due to the timeline associated with the negotiated rulemaking process it is unlikely to be finalized before the 2024 presidential election.

The negotiated rulemaking process will begin with a virtual public hearing on July 18, at 10 a.m. ET, to discuss the rulemaking agenda.

There will also be the opportunity for a future Congress to nullify any final rule that ED puts forth through the Congressional Review Act. Congress used this legislative tool to try to block Biden’s initial debt cancellation plan, but was unable to override Biden’s veto of the measure.

Biden also provided details on how the administration would handle the return to student loan repayment this fall and said that ED would create a temporary 12-month “on-ramp” to repayment. During this period, interest would still accrue on student loan balances, but a borrower would not enter into default status if they miss a payment.

The move garnered praise from the most ardent supporters of student loan debt cancellation, with Sen. Elizabeth Warren (D-Mass.) endorsing Biden’s decision.

On the other hand, Rep. Virginia Foxx (R-N.C.), chairwoman of the House Committee on Education and the Workforce, lambasted the administration's new effort to move forward with debt cancellation.

“Taxpayers just got sucker punched – again – by this administration,” Foxx said. “Today, President Biden announced that taxpayers will be forced to pay for the costliest regulation in our nation’s history, which will only exacerbate inflated college costs and excessive debt balances.”

As a part of Friday’s announcement Education Secretary Miguel Cardona also highlighted that ED finalized its new income-driven repayment plan, the so-called “Saving on A Valuable Education (SAVE)” plan. The administration released an unofficial copy of the final regulations, which will become official upon publication in the Federal Register, which is expected to happen as soon as next week.

“It will cut monthly payments to zero dollars for millions of low-income borrowers, save all other borrowers at least $1,000 per year, and stop runaway interest that leaves borrowers owing more than their initial loan,” Cardona said.

The regulations will not go into full effect until July 1, 2024, but ED will implement three benefits before the end of the student loan payment pause, set to expire on Sept. 1, 2023 when interest will once again begin to accrue.

Those benefits include:

  • Raising the protected income level from 150% to 225% of the federal poverty guidelines (FPL) which will expand eligibility for borrowers who will be required to make $0 repayments;

  • Monthly interest not covered by the SAVE plan will no longer be charged; and 

  • A spouse’s income will no longer be required for a payment calculation if married borrowers file their taxes separately.

In his remarks, Biden placed blame on the Supreme Court and Republicans for seeking to derail his debt cancellation program.

“I didn’t give any false hope. The question was whether or not I would do even more than was requested,” Biden said of his decision to pursue student loan debt relief through the negotiated rulemaking process. “What I did I felt was appropriate and was able to be done and would get done. I didn't give borrowers false hope, but the Republicans snatched away hope that [student loan borrowers] were given.”

There are still many unanswered questions surrounding the implementation and process of these newly announced initiatives. Stay tuned to Today’s News for more updates from NASFAA as information becomes available.


Publication Date: 6/30/2023

Ben R | 7/6/2023 9:28:17 AM

I would be curious as to how loan subsidizes such as this are factored into annual appropriations. If ED is given a budget, does that factor in loan subsidies?

Jeff T | 7/5/2023 2:34:13 PM

ED should explain what is meant by regulations specific to SAVE not being enacted until July 1, 2024, but implementation of the benefits taking place before September 1, 2023. When can borrowers formally apply for the SAVE repayment plan via

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