The Biden administration is actively pursuing broad student loan forgiveness for borrowers. However, its initial effort under the HEROES Act was struck down by the U.S. Supreme Court in June 2023. In response to that ruling, President Biden vowed to persist in his efforts to provide debt relief to millions of borrowers. This renewed initiative, referred to as "Plan B," aims for sweeping student loan forgiveness. As anticipated, legal challenges have already emerged against this latest attempt.
Legal Challenges Against Biden’s Forgiveness Plan
Seven Republican-led states have initiated a lawsuit against the Biden administration's latest attempt to implement broad student loan forgiveness. The lawsuit filed by Missouri Attorney General Andrew Bailey, who was joined by Alabama, Arkansas, Florida, Georgia, North Dakota, and Ohio, was filed last Tuesday.
This student loan forgiveness plan is currently undergoing the negotiated rulemaking process, with regulations anticipated to be finalized sometime this October. However, the states claim to have "uncovered documents" that outline plans to roll out the plan in the coming days. They allege that the U.S. Department of Education has already begun directing federal student loan servicers to initiate forgiveness under the plan, with dates set as early as September 3 and 7. While legal challenges to this new initiative were expected, this lawsuit aims to suspend the program before its implementation.
Update: September 5, 2024
The U.S. District Court for the Southern District of Georgia has placed a temporary restraining order on the Biden administration regarding the implementation of their Plan B student loan forgiveness opportunity. The Biden administration is restricted from implementing any aspects of the plan, and a court hearing has been set for later this month. At this point in time, the U.S. Department of Education has yet to issue a statement regarding the lawsuit.
Biden’s “Plan B” Student Loan Forgiveness Plan
“Plan B” was introduced after the U.S. Supreme Court overturned the administration's initial effort at mass student loan forgiveness. This new plan is based on a different legal authority than its predecessor, and its regulations are currently undergoing the negotiated rulemaking process. Typically, this process requires that final rules be published by November of a given year for implementation on the following July 1, as mandated by the statutory Master Calendar. While the negotiated rulemaking process generally adheres to the Master Calendar, there have been instances where Final Rules allow for earlier implementation upon publication with authority of the Secretary of Education. However, such exceptions are explicitly stated in the Final Rules, which, in this case, have not yet been released. Draft regulations of the forgiveness plan were released in April, and most details of the plan are public. The plan was already expected to face legal challenges upon the issuance of the Final Rules.
The current lawsuit is alleging that the U.S. Department of Education is unlawfully implementing the new forgiveness program in the coming days, ahead of the issuance of the Final Rules. The plaintiffs argue that the Biden-Harris administration and the U.S. Department of Education lack the authority to roll out the mass forgiveness plan on this timeline.
Biden-Harris Administration’s Debt Relief Efforts
The lawsuit estimates that student loan forgiveness could impact up to 25 million borrowers, potentially forgiving $75 billion in federal student loan debt. To date, the Biden administration has forgiven over $168 billion through various student loan forgiveness programs, including waivers for Public Service Loan Forgiveness, one-time adjustments for Income-Driven Repayment (IDR), total and permanent disability discharges, and the SAVE Plan.
At the end of July 2024, the U.S. Department of Education released a statement outlining their plans to notify borrowers about upcoming forgiveness opportunities. They announced that borrowers will receive an email detailing the expected forgiveness plan, along with instructions for opting out if they choose not to participate.