Student-loan borrowers who qualified for the first debt relief plan are not yet guaranteed relief under Biden's new route

In a 6-to-3 decision, the court ruled the loan forgiveness program, which was projected to help 40 million people and cost $400 billion, was unconstitutional.

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• Biden is planning to cancel student debt under a new law after the Supreme Court struck down his first plan.
• He'll use the Higher Education Act, which requires hearings and public comment.
• It's unclear at this point who will qualify for relief under the new plan.

It's not yet clear who will get student-loan forgiveness under President Joe Biden's new plan.

Last week, the Supreme Court struck down Biden's first plan to cancel up to $20,000 in student debt using the HEROES Act of 2003, which allows the Education Secretary to waive or modify student-loan balances in connection with a national emergency, like COVID-19.

It's not the end of the road. Just hours after the court handed down the decision, Biden announced a new plan to cancel student debt using the Higher Education Act of 1965, which does not require a national emergency for relief.

The Higher Education Act states that the Education Department can "enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand" related to federal student debt. Education Secretary Miguel Cardona announced on Friday he has started the negotiated rulemaking process — which includes hearings and public comment — to get the ball rolling on using that law. 

The HEROES Act, in contrast, did not require negotiated rulemaking and would have allowed the department to move through implementation much quicker. Given the new standards surrounding the Higher Education Act, it's not yet guaranteed that the same borrowers who benefitted from Biden's first proposal will qualify for the president's new plan.

"The Department will design the parameters of the program with public participation over the coming months," the department's FAQ stated. "However, the Secretary has directed his staff to explore policy options for debt relief that will help as many people as possible."

It's unclear what those policy options will be at this point, but the department's FAQ stated that "the Secretary has begun a new rulemaking process to consider other ways to provide debt relief to as many working and middle-class borrowers as possible."

Bharat Ramamurti, deputy director of the National Economic Council, also said during a Friday press briefing that "one of the things about the rulemaking process is that we can't actually prejudge its outcome. Part of how we do this process is that we initiate it, we put a proposal on the table, we work with stakeholders to get their input. That ends up shaping the scope of the proposal." 

As Insider previously reported, the new process for implementing Biden's debt relief under the Higher Education Act could take months, and borrowers are still scheduled to resume payments in October. To provide some additional relief, Cardona announced a 12-month "on-ramp" period following the payment resumption to ensure borrowers who miss payments are not reported to credit agencies. The department has also finalized its new income-driven repayment plan — known as the SAVE plan — which is expected to make borrowers' monthly payments cheaper.

Given the prolonged timeline for relief, some Democratic lawmakers want Biden to consider additional measures so borrowers do not have to resume payments without the loan forgiveness they were counting on. New York Rep. Alexandria Ocasio-Cortez told CNN on Sunday that "people should not be incurring interest during this 12-month on-ramp period."

"So, I highly urge the administration to consider suspending those interest payments," she said.

Rep. Ro Khanna urged Biden to extend the student-loan payment pause once again under the Higher Education Act — even though the debt-ceiling bill the president recently signed into law codified the end of that pause,.

"Now that SCOTUS has blocked student debt relief, @POTUS must use his executive authority under the Higher Education Act to cancel up to $50,000 of debt and extend the pause on student loans," Khanna wrote on Twitter. "Student debt is crushing young people. We can't abandon them."

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