(NewsNation) — After the Supreme Court struck down President Joe Biden’s student loan forgiveness program Friday, he later announced a “new path” to provide debt relief grounded in the Higher Education Act.
“Just moments ago, (Education Secretary) Miguel Cardona took the first official step to initiate this new approach,” Biden said on Twitter on Friday afternoon.
Activists and politicians had been calling for the Biden Administration to use provisions in the Higher Education Act to cancel student debt even before the Supreme Court decision came down.
New York Democrat Rep. Alexandria Ocasio-Cortez wrote on Twitter that the Biden Administration should use the act to continue loan forgiveness “ASAP“, and other lawmakers such as Rep. Ilhan Omar, D-Minn, and Missouri Sen. Cori Bush, also a Democrat, took to social media as well.
The Higher Education Act, which was signed in 1965 by former President Lyndon B. Johnson, establishes federal aid programs such as grants and loans to help students pay for college and university. A provision in the act allows the Secretary of Education to compromise, waive or release federal student loans.
What is the Higher Education Act?
According to NerdWallet, the HEA allows the Education Secretary to waive the loans without specific requirements, such as a national emergency.
NerdWallet wrote the act has been used to cancel student debt before, such in the case Public Service Loan Forgiveness and income-driven repayment programs, where eligible borrowers’ debt is erased after they make payments for a certain number of years. Public Service Loan Forgiveness is for full-time employees of federal, state, local and tribal governments or not-for-profit organizations.
Biden’s current student loan forgiveness program invoked different legislation, the Higher Education Relief Opportunities for Students Act, to cancel up to $10,000 for those who earn less than $125,000 a year. Those who received Pell grants are eligible for $20,000 of relief.
The HEROES Act lets the Education Secretary “waive or modify” statutory or regulatory provisions when it comes to federal student financial assistance programs to make sure “borrowers are not placed in a worse position financially” regarding loans as a result of war or other national emergencies.
The COVID-19 pandemic was declared a national emergency by both Presidents Donald Trump and Biden, which allowed Cardona to use the HEROES act to enact a pause on federal student loan repayment, interest accrual and involuntary collections during the entirety of the pandemic.
However, the Congressional Research Service points out the HEROES Act has not been used to cancel existing student loan balances before.
Could the Higher Education Act be used to end student debt?
Advocates, such as the Debt Collective, have said it is possible for the Biden administration to use the Higher Education Act to cancel student debt.
“When the Higher Education Act of 1965 made student loan authorities permanent, it solidified their power to compromise,” the Debt Collective wrote in a 2019 memo. “Just as the Securities and Exchange Commission can cut low-dollar deals with banks that break the law, for example, the secretary can settle with debtors for a fraction of what they owe or suspend the collection of student debt altogether.”
Insider reported a number of Democratic lawmakers, including Massachusetts Sen. Elizabeth Warren, introduced a resolution in 2021 urging Biden to use the authority given in the Higher Education Act to put broad debt relief into place. Sen. Richard Blumenthal, a Connecticut Democrat and progressive Vermont independent Rep. Bernie Sanders have also given their support for using the act, Bloomberg said.
The Legal Services Center of Harvard Law School wrote a memo for Warren that said “broad or categorical debt cancellation would be a lawful and permissible exercise of the (Education) Secretary’s authority under existing law.”
Friday on Twitter, Warren said Biden has more tools he can use to cancel student debt — “and he must use them.”
“More than 40 million hard-working Americans are waiting for the help that President Biden promised them, and they expect this administration to throw everything they’ve got into the fight until they make good on this commitment,” the senator said.
But Bloomberg writes the actual process of using the Higher Education Act could be time-consuming, with one expert saying any relief could be delayed until after the 2024 election. Jed Shugerman, a law professor at Fordham University, told the publication the Higher Education Act requires a lengthy rule-making process and comment period that could take about a year. Litigation by opponents could drag things out even longer, Shugerman said to Bloomberg.
Luke Herrine, an assistant law professor at the University of Alabama and former legal director of The Debt Collective, said in NerdWallet that Congress could also step in and block this action via the Congressional Review Act.
Another option would be for the Department of Education to issue an order, which Herrine called a “quasi-judicial act.” An order would potentially be subject to judicial challenge, but not the Congressional Review Act, Herrine said, and it would also not require a year or rulemaking.