Post by stargatebabe on Nov 16, 2024 12:59:51 GMT -6
Student Loan Forgiveness: Biden Pushes New Rule to Aid 8 Million Borrowers
President Joe Biden will try to push through more federal student loan forgiveness before he leaves office, this time targeting those who face significant financial hardships.
Biden this week announced two income-driven repayment plans for borrowers to work towards the end of their debt or even full loan forgiveness on a 20- to 25-year timeline under the Pay-As-You-Earn (PAYE) and Income-Contingent Repayment (ICR) plans.
On Friday, the Biden administration continued its big push to get in as much debt relief established as possible before the second Trump administration starts by announcing a new waiver on student loan debts in which the bower has experienced or is experiencing hardship related to their loan.
The new provision would define hardship as "likely to impair the borrower's ability to fully repay the Federal government" or "renders the costs of enforcing the full amount of the debt"—or, in other words, if the department determines that the borrower will most likely default on the loan, they'll wipe it out.
Officials will use a "predictive assessment" to provide Education Secretary Miguel Cardona with the information and allow him to exercise discretion to dispense this potential one-time relief "as soon as practicable," according to the Federal Register.
The Department of Education (DOE) has determined that the proposed new measure would apply to between 2.67 million and 8 million borrowers. Meanwhile, during Biden's administration, the DOE has provided $175 billion in student loan forgiveness for roughly 5 million people.
Newsweek reached out to the Department of Education (DOE) for comment by email on Saturday morning.
The Biden administration has made repeated attempts to broadly cancel federal student loan debts for various types of qualifying borrowers. President-elect Donald Trump during the debate with Vice President Kamala Harris in September attacked the administration for failing to deliver on their promises of cancellation, calling the plan a "total catastrophe."
Trump also said that the plan to outright cancel debt for millions of American would prove "unfair" for the millions of others who did repay their loans.
Courts have struck down a number of Biden's previous efforts to cancel student debt, including the Saving on a Valuable Education (SAVE) plan, which remains in a state of uncertainty as the courts consider challenges to the policy.
Due to the challenges to SAVE, the administration reintroduced the PAYE and ICR plans as stand-alone measures. A DOE spokesperson previously told Newsweek that the move allows borrowers to continue making progress on repayment while SAVE remains in legal limbo.
"The interim final rule ensures the Department can meet its statutory obligation under the Higher Education Act to let borrowers make payments on an income contingent repayment plan," the spokesperson said. "It does this through a stopgap measure that reopens enrollment for borrowers in two other repayment plans, Income Contingent Repayment (ICR) and Pay As You Earn (PAYE). We will provide more information when the Department is ready to begin enrolling new borrowers in these plans."
The first Trump administration tried to increase monthly payments on student loans from 10 to 12.5 percent of borrowers' discretionary income and wanted to merge all income-driven repayment plans into one simplified plan.
With Trump back in office, it's likely his administration would push to dismantle the SAVE plan and potentially legally challenge the remaining forgiveness plans in place, Michael Ryan, a finance expert and the founder of michaelryanmoney.com, previously told Newsweek.
www.newsweek.com/student-loan-relief-biden-pushes-new-rule-aid-millions-1986863
President Joe Biden will try to push through more federal student loan forgiveness before he leaves office, this time targeting those who face significant financial hardships.
Biden this week announced two income-driven repayment plans for borrowers to work towards the end of their debt or even full loan forgiveness on a 20- to 25-year timeline under the Pay-As-You-Earn (PAYE) and Income-Contingent Repayment (ICR) plans.
On Friday, the Biden administration continued its big push to get in as much debt relief established as possible before the second Trump administration starts by announcing a new waiver on student loan debts in which the bower has experienced or is experiencing hardship related to their loan.
The new provision would define hardship as "likely to impair the borrower's ability to fully repay the Federal government" or "renders the costs of enforcing the full amount of the debt"—or, in other words, if the department determines that the borrower will most likely default on the loan, they'll wipe it out.
Officials will use a "predictive assessment" to provide Education Secretary Miguel Cardona with the information and allow him to exercise discretion to dispense this potential one-time relief "as soon as practicable," according to the Federal Register.
The Department of Education (DOE) has determined that the proposed new measure would apply to between 2.67 million and 8 million borrowers. Meanwhile, during Biden's administration, the DOE has provided $175 billion in student loan forgiveness for roughly 5 million people.
Newsweek reached out to the Department of Education (DOE) for comment by email on Saturday morning.
The Biden administration has made repeated attempts to broadly cancel federal student loan debts for various types of qualifying borrowers. President-elect Donald Trump during the debate with Vice President Kamala Harris in September attacked the administration for failing to deliver on their promises of cancellation, calling the plan a "total catastrophe."
Trump also said that the plan to outright cancel debt for millions of American would prove "unfair" for the millions of others who did repay their loans.
Courts have struck down a number of Biden's previous efforts to cancel student debt, including the Saving on a Valuable Education (SAVE) plan, which remains in a state of uncertainty as the courts consider challenges to the policy.
Due to the challenges to SAVE, the administration reintroduced the PAYE and ICR plans as stand-alone measures. A DOE spokesperson previously told Newsweek that the move allows borrowers to continue making progress on repayment while SAVE remains in legal limbo.
"The interim final rule ensures the Department can meet its statutory obligation under the Higher Education Act to let borrowers make payments on an income contingent repayment plan," the spokesperson said. "It does this through a stopgap measure that reopens enrollment for borrowers in two other repayment plans, Income Contingent Repayment (ICR) and Pay As You Earn (PAYE). We will provide more information when the Department is ready to begin enrolling new borrowers in these plans."
The first Trump administration tried to increase monthly payments on student loans from 10 to 12.5 percent of borrowers' discretionary income and wanted to merge all income-driven repayment plans into one simplified plan.
With Trump back in office, it's likely his administration would push to dismantle the SAVE plan and potentially legally challenge the remaining forgiveness plans in place, Michael Ryan, a finance expert and the founder of michaelryanmoney.com, previously told Newsweek.
www.newsweek.com/student-loan-relief-biden-pushes-new-rule-aid-millions-1986863
