College Graduate Calls Family On Video To Celebrate
Kemal Yildirim | Getty Images
Earlier in August, the U.S. Department of Education under President Joe Biden announced he will cancel the student loan debt of an additional $ 1.1 billion for approximately 115,000 borrowers who attended the ITT, a now defunct school.
This final round of forgiveness results in a total administration of about According to the Ministry of Education, about 563,000 borrowers spent $ 9.5 billion.
While this is a victory for many, experts say, it does not mean that there will necessarily be broad-based student debt forgiveness in the near future.
More from Invest in You:
$ 3.5 Trillion Democrats Budget Plan Includes Serious Aid For Families With Children
HBCU Clears Student Balances, Writes Off Federal Funds
Half of the young investors have invested stimulus money. That’s where they put it
The reason is that so far the canceled debt has been settled through a program called Borrower Protection to Maturity. This targeted aid was created to protect people from being scammed by schools that commit misconduct or violate certain laws, such as falsely claiming job security or incorrectly telling students that loans will be transferred to other colleges.
This is unrelated to the Biden administration’s efforts to determine whether the president can legally cancel federal student loan debt through an executive order.
“These are apples and oranges,” said Betsy Mayotte, president and founder of The Institute of Student Loan Advisors, a non-profit organization.
However, headlines about student loan write-offs have begun to appear in recent months, adding confusion and excitement to borrowers. There has been a recent increase in loans canceled due to borrower protection as the Biden administration is catching up, Mayotte said.
The updated program rules were supposed to take effect under former President Donald Trump, but have been postponed. The former administration then issued its own rules in July 2020, months before Trump left office.
“They have made it nearly impossible to get aid and have suspended or suspended any applications under development,” Mayotte said.
That changed when Biden took office in 2021. He relaunched the program and quickly extended assistance to thousands of borrowers.
“There is a catch-up on this front now and it is likely to continue,” said David Bergeron, a higher education expert who served as Assistant Secretary for Higher Education and Deputy Assistant Secretary for Policy, Planning and Innovation. at the US Department of Education under the Obama administration.
What’s next with wide student loan forgiveness
Of course, the Biden administration is still working on broader cancellation of student loans, which would help the millions of people struggling to pay off.
The President is now awaiting reports from the education department and the US Department of Justice, who will state their thoughts on the legality of writing off student loans through executive action.
“The government is working on it to make it right,” said Will Seeley, co-founder and CEO of Summer, a company that helps borrowers streamline the process and save on student debt.
If Biden forgives portion of student loan debt through enforcement actionAccording to Mayotte, it is likely that it will be challenged in court and could lead to more problems for borrowers if it is not supported.
“I understand why he doesn’t move forward with a presidential decree until he’s confident that if challenged, he will win,” she said of Biden. hesitation over debt cancellation on one’s own.
Although some legislators such as Senate Majority Leader Chuck Schumer, New York, and Senator Elizabeth Warren, Massachusetts both argued that that the president can legally write off student loan debt by his own order, not all experts are so sure and want to minimize potential harm to borrowers.
“The biggest risk for borrowers is that they will fall into this legal black hole,” Bergeron said.