President Biden’s original student loan cancellation plan was struck down by the U.S. Supreme Court in June 2023. Read below for more information about what happened at the Supreme Court and President Biden’s new plan to provide debt relief. You can also if you are eligible for other cancellation programs that are still in place.
On June 30, 2023, the Supreme Court struck down President Biden’s plan to provide relief to millions of low-income Americans who are struggling with student loan debt. Borrowers were counting on debt relief to manage their payments when repayment restarted in September 2023 after being paused for three years.
After the Supreme Court struck down the student debt cancellation plan, President Biden announced he would pursue an alternative pathway to provide debt relief to borrowers.
What was President Biden’s original plan to cancel student loan debt?
On August 24, 2022, President Biden announced that the government would offer one-time federal student debt relief to borrowers who made less than $125,000, or $250,000 for spouses that file their taxes jointly. All eligible borrowers could receive up to $10,000 in cancellation, and borrowers who received Pell grants while in college could receive up to $20,000 in cancellation.
Lawsuits challenging President Biden’s debt relief plan put the program on hold. In February 2023, the U.S. Supreme Court heard two cases challenging the debt relief plan. NCLC advocates were with borrowers in the courtroom and on the steps of the Supreme Court during the arguments to defend student loan cancellation.
What did the Supreme Court decide?
On June 30, 2023, the Supreme Court issued decisions in the cases striking down President Biden’s student loan relief plan. By a 6-3 vote, the majority decided that the HEROES Act (a national emergency law) did not give the Department of Education authority to cancel a portion of student loan debt to help borrowers recover from the pandemic. The Court did not address whether any other laws give the President or the Department of Education authority to cancel student debt.
What now for student loan borrowers counting on debt relief?
Although the Supreme Court struck down President Biden’s plan, you may have other options to get debt relief. There are several programs to cancel some or all of your federal loans or have them forgiven, depending on your situation. You can see if you are eligible for other cancellation programs that are still in place.
After the Supreme Court struck down the student debt cancellation plan, President Biden announced he would pursue an alternative pathway to provide debt relief to borrowers.
What is President Biden’s new plan for student loan relief?
Fortunately, the Supreme Court’s opinion on debt relief is limited. The Supreme Court only said that the President is limited to what it can do for borrowers using national emergency authority under the HEROES Act. It does not prevent the Biden Administration from pursuing debt relief using other legal authority.
President Biden has already announced that he will pursue relief for borrowers using the Higher Education Act, the federal law that governs the federal student loan programs, to provide debt relief to borrowers.
When will we know what the new student loan relief plan will look like?
Unfortunately, it will be a while before we know what the plan will look like. The President’s new approach will take longer than the prior plan because the Department of Education has to go through a formal process to develop the new plan’s rules while seeking input from the public along the way. This process is called “negotiated rulemaking” and it typically takes several months and often a year or more.
Will the new debt relief plan be similar to the President’s original cancellation plan?
It’s too soon to say. We won’t know who will qualify until the rules of the new plan are finalized. The new debt relief plan that will be developed through this process could be similar to the prior plan or could be quite different. This process is already underway, but again will take a while to be finalized.
Where can I get more information about the new plan and the negotiated rulemaking process?
You can find out more information about what’s next for student loan debt relief on the Department of Education website. Find information on the negotiated rulemaking process, including a recording of the first public hearing held on this in July 2023, on the Department of Education’s rulemaking site.
How do I share my thoughts about what the new debt relief plan should look like?
The Department of Education’s rulemaking site will be updated in the future with information about how you can share your comments and feedback about what the new plan should look like. You can also share your thoughts on the new plan with us on our Share Your Story page. NCLC will share what we hear from borrowers with the Department of Education.
The COVID-19 payment pause ended August 31, 2023, and repayments restarted on September 1, 2023. Student loan bills will be due in October 2023. See our page Return to Repayment to get ready for payments to resume.
