Is student loan forgiveness dead? Hope is dwindling, but here are Biden's remaining options

President Joe Biden’s plan for mass student loan forgiveness is at the mercy of federal judges, which means borrowers’ hopes for relief are also on hold.

The legal delay comes at the same time as the end of a freeze on student loan bills approaches, leaving borrowers with questions about whether they will be expected to resume payments in 2023 without wider debt relief.

The Education Department and the White House would not say publicly whether there are plans to extend the payment pause or what alternatives they were considering beyond using the president’s executive authority to cancel student loan debt.

But in a recent court filing, Education Department Undersecretary James Kvaal wrote that without wider debt cancellation, the agency expects a "historically large increase in the amount of federal student loan delinquency and defaults as a result of the COVID-19 pandemic." He wrote that the agency was “examining all available options” to address that concern, though he warned the cost might be high.

What's next? US judge strikes down student loan forgiveness plan

President Joe Biden speaks about the student debt relief portal beta test as Education Secretary Miguel Cardona listens in October.
President Joe Biden speaks about the student debt relief portal beta test as Education Secretary Miguel Cardona listens in October.

“The Department estimates that if it temporarily extends the existing COVID-19 pandemic payment and interest accrual pause for federal student loan holders, it will cost taxpayers several billion dollars a month in unrecovered loan revenue," Kvaal wrote.

Kvaal didn’t expand in his filing on what the other options might be, but there are only so many forms debt relief might take. Congress could cancel debt on its own, though with Republicans claiming a majority in the House after the midterm elections, that option seems unlikely even given Democrats’ hold on the Senate.

More food on the table, paying off debts: How the student loan payment pause changed people’s lives

The Education Department has canceled billions in debt through its existing relief programs, but there are limits to who qualifies for those programs, and they often require borrowers to make years of payments before seeing relief.

The Job Creators Network Foundation and six conservatives states have brought separate legal challenges that hobbled the president's plan for mass debt relief, though the administration has said it will fight the challenges in court.

Associate Justice Amy Coney Barrett has twice dismissed emergency appeals from other groups seeking to temporarily halt the president’s plan while the litigation continues, but she did so without comment and without referring the requests to  the full court, where conservatives hold a 6-3 majority.

More: With student loan forgiveness in legal limbo, Feds bet on other debt relief options

Will the president extend the pause on student loan payments?

The administration could extend the payment pause again, though federal officials said the most recent extension would be the final one.

Former President Donald Trump first suspended payments in March 2020. The moratorium also set interest rates at zero percent and came with guidance to loan servicers to stop trying to collect on overdue debts.

In legal limbo: How to prepare now that student loan forgiveness likely isn't coming anytime soon

In the past, the administration has given borrowers just a few weeks' notice before extending the pause. And Biden and the Education Department described the most recent moratorium renewal as the final extension.

Students pass through Sather Gate on the University of California, Berkeley, campus. President Joe Biden's student loan forgiveness plan, announced in August 2022, could lift debt burdens from millions of borrowers, but the program is now in legal limbo.
Students pass through Sather Gate on the University of California, Berkeley, campus. President Joe Biden's student loan forgiveness plan, announced in August 2022, could lift debt burdens from millions of borrowers, but the program is now in legal limbo.

Previous extensions have given those in debt a few extra months of wiggle room, but borrowers have consistently told USA TODAY the uncertainty of paying their student loans weighed on them during the pause.

It’s unclear how long another extension might last, but a suite of new federal policies that could make it easier for borrowers to access the department’s student loan forgiveness plans go into effect on July 1, 2023.

Even before the announcement of Biden’s mass debt relief plan, Republicans had been clamoring for payments to resume. And unlike the debt forgiveness plan, the moratorium applies to everyone with a federal student loan regardless of how much they earn. Biden’s plan for relief is limited to borrowers making less than $125,000 a year – or $250,000 for married couples.

Borrowers' advocates also have started raising the possibility of extending the payment pause.

The Committee for a Responsible Federal Budget has estimated the moratorium costs about $50 billion annually. What’s more, borrowers in repayment plans that require set amounts of payments are receiving credits during the moratorium, effectively reducing what they have to pay the federal government.

Could Congress pass student loan debt forgiveness?

Congress does have the authority to cancel student loan debt. But Republicans will have a majority in the House and Democrats will control the Senate, which makes the possibility of consensus on forgiving student loans narrow in the next session of Congress. In addition, Republican lawmakers have been vocal about their opposition both to the president's plan for forgiveness and the moratorium.

Rep. Virginia Foxx of North Carolina, the Republicans' leader on the House's education committee, described the president's plan as a "illegal student loan bailout."

"Republicans will continue fighting this president’s abuse of the executive pen, including his attempt to keep 40 million borrowers in repayment limbo and forcing taxpayers to foot the bill," Foxx said. "The department simply cannot continue to kick this can down the road."

Clara McElfresh, 18, left, Elsa McElfresh, 15, and Ginny Mitchell, 18, rally to to raise awareness of the cost of college tuition and the burden of student loan debt in April in Wisconsin.
Clara McElfresh, 18, left, Elsa McElfresh, 15, and Ginny Mitchell, 18, rally to to raise awareness of the cost of college tuition and the burden of student loan debt in April in Wisconsin.

Some Democratic lawmakers, including Sens. Elizabeth Warren and Bernie Sanders, introduced legislation in 2019 that would cancel huge swaths of student debt for millions of borrowers. But those efforts never materialized into wider forgiveness.

Warren, when asked about a potential path forward via Congress, instead said the president's "legal authority is clear, and these judges should stop playing politics and get out of the way."

"While Republican officials want to keep Americans crushed under student loans, Democrats are committed to delivering student debt relief for millions of hardworking Americans," Warren said.

Another challenge for congressional action? Not all Democrats are in favor of the current plan for mass student debt cancellation including recently reelected Sens. Michael Bennett of Colorado and Catherine Cortez Masto of Nevada, who have said the administration shouldn't cancel student loan debt without wider reforms to how the country pays for higher education. That puts legislation squeaking through during the current lame duck session of Congress in doubt.

When asked whether the White House would pursue action through Congress during an interview Sunday on NBC’s "Meet the Press," White House senior adviser Anita Dunn sidestepped the question, saying the administration believes the “program will be upheld.”

“The 26 million people in this country who have already applied for the student debt relief, working people, people who are just looking for, as the president would say, a little breathing room,” Dunn said, “and the Republicans are trying to stop this. And we are going to fight for it.”

Could Biden's plan survive the courts?

Yes, the Biden administration still has legal avenues to push its plan through the courts. The administration has appealed the ruling of U.S. District Judge Mark T. Pittman in Texas, who struck down the president's plan.

The administration also can appeal the ruling out of the U.S. Court of Appeals for the 8th Circuit, which had separately blocked the plan. In that case, a panel of three judges, two appointed by former President Donald Trump, temporarily halted the debt relief and noted that loan repayments were already on pause. (Pittman was also appointed by Trump.)

Student loan borrowers and the Too Much Talent Band thank President Joe Biden and Vice President Kamala Harris for extending the student loan pause and demand that they cancel student debt at a gathering outside in January.
Student loan borrowers and the Too Much Talent Band thank President Joe Biden and Vice President Kamala Harris for extending the student loan pause and demand that they cancel student debt at a gathering outside in January.

White House Press Secretary Karine Jean-Pierre said Monday that the administration will continue to fight the lawsuits.

“We are confident in our legal authority for the student debt relief program and believe it is necessary to help borrowers most in need as they recover from the pandemic,” Jean-Pierre said. “The administration will continue to fight these baseless lawsuits by Republican officials and special interests and will never stop fighting to support working and middle class Americans.”

The White House has not indicated a plan beyond the appeals, however.

It's not immediately clear if or when the Supreme Court would take up the cases. It's also unclear if the cases would be decided on the court's emergency docket or if the justices might reach to the underlying questions raised by the suits, which could keep the program in legal limbo for even longer.

Is the Education Department still canceling student loans through other programs?

Yes, the agency has signed off discharging more than $38 billion for roughly 1.7 million borrowers through existing debt relief plans since Biden took office. It also approved canceling about $15 billion in debt for more than 247,000 borrowers in a program meant to benefit public service workers. On Friday, the agency shared updated figures showing discharges were approved for roughly 360,000 borrowers in the program, representing about $24 billion in student loan debt as of the end of October.

Separately, a U.S. District Judge in California this week approved an agreement between the Education Department and borrower advocate groups. They had sued in connection to the department's slow processing of debt relief applications for borrowers who said they had been defrauded by their university. That settlement is expected to erase nearly $6 billion in student loan debt for roughly 200,000 borrowers.

Is student debt relief still available?: Yes, here's how feds are erasing debt through existing forgiveness programs

The administration will also conduct a one-time review of borrowers paying down their debts via income-driven repayment plans. Under these initiatives, borrowers are supposed to have their debts forgiven after 20 to 25 years of making payments.

The Biden administration has said it expects borrowers to receive credits for past payments that may have erroneously been declared ineligible. In practice, that means the review probably will result in more borrowers receiving student loan forgiveness.

The Education Department also is expected to introduce a new income-driven repayment plan that would lower how much borrowers pay every month.

And Thursday, the Education Department and the Department of Justice shared a new process meant to create, “transparent and consistent expectations” for borrowers seeking to discharge their debts via bankruptcy. The requirements for erasing student loan debt via this process are high, and few with student loan debt have historically accessed the relief. In fact, the federal government had fought against cases where bankruptcy judges had agreed to wipe out borrowers’ debt.

Under the new process, the Justice Department may recommend that certain people have their student loans discharged through bankruptcy.

Contributing: Rebecca Morin 

Contact Chris Quintana at (202) 308-9021 or cquintana@usatoday.com. Follow him on Twitter at @CQuintanadc

This article originally appeared on USA TODAY: Student loan forgiveness isn't dead. Here's the (narrow) path forward