After Biden Canceled $ 1 Billion Student Loan, 3 Possible Next Steps For Student Loan Forgiveness

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Last week, the Biden administration announced a new interpretation of the federal student loan cancellation program, which will will write off a student loan of $ 1 billion

The student debt cancellation will be provided under the Borrower Repayment Protection Program – a student loan write-off program that was created with new procedures and regulations. Obama administration in 2016. The Borrower Protection Program was designed to write off federal student debt for students who have been misled, defrauded, or otherwise harmed by their colleges and universities (often commercial institutions).

Under the leadership of former Education Secretary Betsy DeVos, the US Department of Education has set stricter rules governing the program, as well as enacted a policy of granting partial forgiveness of student loans for approved borrower protection applications in an attempt to limit aid. Thus, while the Department may have found that student loan borrowers were misled by their school, it could nonetheless provide little or no forgiveness on the student loan.

Education Minister Miguel Cardona, who was recently confirmed in order to replace DeVos, he reversed the policy of partial assistance to DeVos. As a result, thousands of student loan borrowers whose borrower protection applications have already been approved will now be able to receive full student loan cancellations in the coming weeks. The total total student loan forgiveness is expected to be around $ 1 billion.

Student loan advocacy organizations and progressive lawmakers have praised the Biden administration. But many groups also argued that the administration must go further to tackle the soaring student loan debt. The White House has indicated that it continues to explore additional avenues to provide student loan borrowers with additional assistance. Here’s what could happen next.

Optional Student Loan Forgiveness Through Borrower Protection Program

While student loan activists and supporters have applauded Minister Cardone for expanding assistance to protect borrowers, student loan debt will only be canceled for 72,000 borrowers. More than 200,000 student loan borrowers have applied for student loan forgiveness under the Borrower Protection Program, and the fate of the remaining 130,000 applications remains uncertain.

Student loan borrowers ‘hopes of federal court intervention and the repeal of DeVos’ new strict borrower protection rules were dashed last week when A federal court hearing the borrower protection case largely upheld the new rules. Thus, at least in the near future, stricter borrower protection rules that increase the burden of proof required for student loan borrowers to approve their claims require borrowers to prove that they have suffered financial damage and narrow the definition of distortions associated with school. – remain valid.

To overturn these stricter rules, the Biden administration could potentially reverse them and replace them with more borrower-friendly rules. However, the introduction of new rules is a lengthy process. Former Secretary of State DeVos did not finalize the current rules until 2020, near the end of President Trump’s term, although the process began in 2017. The Biden administration has yet to make any firm commitment to rewrite the rules.

Alternatively, Congress could pass a new law that repeals the existing rules and replaces them with new rules that are more favorable to borrowers. This would be a much faster path to reforming the borrower protection program. Such a law was passed by Congress with a bipartisan majority in 2020, but it was vetoed President Trump. It’s unclear if lawmakers will try again in this session.

Meanwhile, ongoing class action and other lawsuits against the borrower protection program continue to play out in federal courts. So far, the Biden administration has not materially changed course regarding the Department of Education’s attitude towards these claims.

Reforming Income-Based Payments and Forgiveness of Public Services Loans

Additional student loan benefits do not have to be limited to a borrower protection program. Over the course of the campaign, Biden has repeatedly announced his intention to reform and improve the income-based repayment and public service loan forgiveness (PSLF) program.

Biden proposed developing a new income-driven repayment plan that would allow student loan borrowers to pay off only 5% of their discretionary income against their student loans. If adopted, this plan could cut the monthly payments of millions of student loan borrowers by 50% or more, while still allowing borrowers to get forgiven of any remaining student loan balance after 20 years. Currently, student loan forgiveness may be taxed for the borrower, although Biden recently signed an incentive law that temporarily exempts student loan forgiveness from taxation

Biden also advocated for improved government service loan forgiveness by expanding eligibility for indirect federal loans and non-income repayment plans, and envisioned a gradual, gradual forgiveness of student loans over a 10-year period of public service employment. rather than the all-or-nothing student loan forgiveness currently in effect at the end of the program.

So far, the Biden administration has not begun any process to enact these reforms through a regulatory process, which means that the most likely way to change these programs would be through congressional legislation. Democratic MPs in the last session introduced several bills aimed at solving problems with these programs, but these bills did not make it to the Republican-controlled Senate. Now that Democrats control both chambers, reforms to forgive government loans and income-based payments are more likely to succeed.

Widespread Student Loan Forgiveness

Meanwhile, student loan borrower activists, advocacy groups and progressive legislators in Congress have been pushing President Biden for months to end student debt through the executive branch. Biden supports the widespread forgiveness of student loans, but he has repeatedly pointed out that he prefers Congress to decide to annul student loans through legislation rather than acting unilaterally through decree.

While many student loan legal experts have argued that Biden has the right to seek forgiveness of student loans through executive action, the Department of Education attorneys under former Secretary DeVos have come to the opposite conclusion, and Biden has expressed deep uncertainty about this path.

The President has repeatedly stated that he will support a $ 10,000 forgiveness to borrowers, while student loan borrower advocacy groups force him to cancel $ 50,000 or more. Biden says he objects to the $ 50,000 figure

Whether the widespread student loan forgiveness is being initiated by President Biden through the executive branch or Congress through law, White House and Democratic leaders in Congress suggest that there are likely to be restrictions on student loan forgiveness based on a variety of potential factors, such as type or the balance of loans, the borrower’s income or the level of education received by the borrower.

Many activists still insist on full and universal cancellation of student loans and carry out week of action this week is to maintain the pressure campaign.

Further reading

72,000 Borrowers To Get Forgiven On $ 1 Billion Student Loan – Are You Eligible?

Will there be forgiveness on a $ 10,000 student loan after the Biden administration cancels $ 1 billion?

Miguel Cardona approved as Minister of Education

Borrowers face huge delays when applying for the student loan forgiveness program

Congress Adopts Biden Incentive Act: 6 Takeaways For Student Loan Borrowers

Incentive Bill Provides Hidden Student Loan Tax Credit

Congress Makes Big Changes to Income-Based Payment Repayment: What Student Loan Borrowers Should Know

Senate Adopts Student Loan Tax Incentive Bill – “Will It Pave the Way” for Student Loan Cancellation?

Here’s everyone who wants Biden to cancel student loan debt (that’s a big list)

Whether Biden cancels student debt will depend on these three things

Could these student loan borrowers be excluded from Biden’s pardon?

Can Biden Cancel Private Student Loans? 3 options

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