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Despite the Supreme Court’s decision to invalidate President Joe Biden’s historic student loan forgiveness program in late June, his administration has since discovered methods to erase over $48 billion in debt.
The cancellations have been made possible by federal student loan forgiveness programs that are currently in place. These programs are only available to certain types of borrowers, including those who have paid for at least 20 years, those who work in the public sector, and those who were duped by for-profit colleges.
These initiatives are not related to the abandoned forgiveness plan, which would have eliminated roughly $430 billion of the $1 6 trillion in federal student loan debt outstanding at one point in time
Since taking office, the Biden administration has been gradually eliminating student loans through these already-existing programs, and it has discharged a total of $127 billion for almost 3 6 million people to date.
Because of the Biden administration’s efforts to temporarily expand certain debt relief programs and to fix previous administrative errors made to borrowers’ student loan accounts, more student loan forgiveness was granted than under any previous administration. The Trump administration attempted to restrict some of these forgiveness programs and slowed the processing of some applications; in contrast, the actions are striking.
But Biden’s Republican critics say that at least some of his debt relief actions are illegal and are an attempt to circumvent the Supreme Court’s ruling.
Recounting past payments and fixing errors
Nearly $42 billion of federal student loan debt has been canceled for almost 855,000 borrowers enrolled in income-driven repayment plans – largely due to the Biden administration’s effort to recount borrowers’ past payments and fix what officials have called “past administrative failures.”
After making qualifying payments for at least 20 years, borrowers enrolled in income-driven repayment plans—which have been offered in some capacity since 1993—generally qualify for debt discharges. By linking monthly payments to a borrower’s income and family size, the plans reduce monthly payments.
However, the Department of Education has had difficulties in the past keeping track of borrowers’ payments.
Last year, the US Government Accountability Office recommended that the department do more to ensure that borrowers receive the forgiveness they are entitled to, after it found that there were thousands of loans still in repayment that could already be eligible for forgiveness.
In an email to CNN, a Department of Education official said, “These are borrowers receiving discharges that they should have received under programs authorized by Congress if they’d been operated as they should have over decades.”
Generally, the one-time recount will give borrowers credit toward forgiveness for any months in which they made payments regardless of what repayment plan they were enrolled in at the time, according to the Department of Education. The recount especially helps borrowers who may have been inappropriately steered by their student loan servicing company into a long-term forbearance, a period in which they stopped making payments.
A legal challenge moves forward
The Biden administration first announced the one-time account adjustment effort in April 2022, but the cancellations didn’t start until this year.
Two weeks after the Supreme Court struck down Biden’s signature loan forgiveness program, the administration announced it was canceling $39 billion in student loan debt as a result of the changes, raising doubts about the move’s legality.
Republican Representative: “The Biden administration is trampled on by the rule of law, harming borrowers, and misusing taxpayers to chase headlines.” In a statement at the time, Virginia Foxx, the chair of the House Committee on Education and the Workforce, said
She continued, “Today’s celebration of counting no payments as payments is just the most recent illustration of the White House’s ongoing delusion.”
The Biden administration is facing at least one lawsuit over the account adjustments, filed by the New Civil Liberties Alliance on behalf of the conservative groups Cato Institute and the Mackinac Center for Public Policy. The plaintiffs recently filed an appeal after the lawsuit was dismissed by a federal judge in Michigan, who ruled that they did not have standing to bring the complaint.
The Biden administration’s attorneys are not yet obligated to reply to the complaint and provide the legal justification for waiving billions of dollars in student loan debt by making adjustments to previous payments.
“Considering its broad jurisdiction over the federal student loan program in general and the income-driven repayment plans in particular, the department may be depending on a number of sources of authority,” stated Abby Shafroth, co-director of advocacy at the National Consumer Law Center and head of its Student Loan Borrower Assistance Project.
Shafroth stated that she would be surprised if the court’s ruling reversed the debt relief that has already taken place, even in the event that the lawsuit is successful.
Expanding debt relief program for public-sector workers
Since Biden took office, the Public Service Loan Forgiveness program has helped 715,000 borrowers get their student loan debt forgiven for almost $51 billion.
Public sector employees who have made 120 qualifying monthly student loan payments—roughly ten years’ worth of payments—are eligible to have their outstanding federal student loan debt cancelled under the PSLF program. Teachers, social workers, some nurses and doctors, government attorneys, and other government and nonprofit employees may be eligible for the program.
Congress established the program in 2007, but prior to Biden taking office, it was beset by administrative issues.
In 2021, Biden put a temporary waiver in place, expanding eligibility so that some borrowers could retroactively receive credit for past payments that did not otherwise qualify for PSLF.
More than 95% of the borrowers who have been granted debt relief by the PSLF program qualified because of Biden’s temporary waiver.
The temporary benefits ended in October 2022. However, the Department of Education has since carried out an executive rulemaking procedure to alter some of the PSLF program’s qualifying limitations permanently. The modifications enable borrowers to get credit toward PSLF for late, partial, or lump sum payments, among other things. Those changes went into effect in July.
Processing claims left over from the Trump administration
The Biden administration has canceled $22. 5 billion of student loan debt for more than 1. 3 million borrowers via the borrower defense to repayment program, which provides student loan relief to those who were duped by their college.
Most recently, the government discovered that the for-profit university had misled students about their employment prospects, leading to the cancellation of $37 million for over 1,200 borrowers who attended the University of Phoenix.
Congress established the borrower defense program many years ago, but it was rarely utilized until the for-profit network of Corinthian Colleges failed in 2015.
The Department of Education has made headway under Biden in clearing the backlog of borrower defense claims that accrued during the Trump presidency.
At one point, former Education Secretary Betsy DeVos was working to restrict the program, and more than 200,000 borrower defense claims were still pending. Those efforts were ultimately unsuccessful.
Cutting red tape for disabled borrowers eligible for debt relief
Additionally, the Biden administration has simplified the process for eligible disabled borrowers to obtain debt relief. 11 million has been disbursed to nearly 513,000 borrowers who are totally and permanently disabled. 7 billion in student loan forgiveness since 2021.
In the past, in order to demonstrate their eligibility for debt relief, borrowers had to submit paperwork from the Social Security Administration, the Department of Veterans Affairs, or a doctor.
However, the Biden administration altered the regulation to allow the Department of Education to automatically discharge disabled borrowers without their having to submit documentation. These borrowers will be identified through administrative data matching with the Social Security Administration. Ad Feedback Ad Feedback Ad Feedback Ad Feedback Ad Feedback.
FAQ
Has student loan forgiveness been approved?
With today’s announcement, the Biden-Harris Administration has authorized $136 in total loan forgiveness. 6 billion for more than 3. 7 million Americans.
What are the new rules for student loan forgiveness for 2023?
In the spring of 2023, borrowers who have made payments for IDR forgiveness for 20 or 25 years (240 or 300 months) may be eligible to have their loans forgiven. As soon as borrowers complete the necessary number of months for forgiveness, ED will continue to discharge loans. In 2024, all other borrowers will receive updates to their loan accounts.
How will I know if my student loan will be forgiven?
How can I find out if my student loans are forgiven? You will receive a notification letter from the loan servicer or Department of Education if you are eligible for loan forgiveness under PSLF, Teacher Loan Forgiveness, or IDR discharge. Your account settings will determine whether you receive the letter by mail or electronically.
What did the Supreme Court rule on June 30 2023?
DECISION: June 30, 2023: The Court ruled, 6-3, that Colorado could not require a website designer to create expressive designs that convey messages that the designer disagrees with because that would be against the First Amendment. Justice Neil Gorsuch wrote the majority opinion.
Read More :
Supreme Court strikes down Biden student-loan forgiveness program
https://www.cnn.com/2023/10/22/politics/biden-student-loan-forgiveness-supreme-court/index.html