Biden administration scales back student debt relief for MILLIONS

The Biden administration quietly announced on Thursday a change to its student debt forgiveness program, which could exclude four million borrowers who have loans owned or backed by private companies.

The federal government’s turnaround comes after the first legal objections to the policy were filed and after criticism of the huge cost to taxpayers. Critics also claimed the plan is an illegal use of President Joe Biden’s executive power.

The Department of Education announced that private loans are not eligible for the contingency plan, which could cost $400 billion over a 10-year period, according to the Congressional Budget Office earlier this week.

The scale-back on Perkins and Federal Family Education Loans — which are bank loans backed by federal guarantees — addresses concerns that the companies could challenge the Biden administration in court. Politics reported.

They used to be an important part of federal student loans, but were discontinued in 2010 after a major overhaul by the Obama administration shifted to direct government loans.

Nevertheless, about four million people still have FFEL loans, according to government data identified in the report. Forty-five million Americans have student loans.

The Biden administration’s latest policy is likely to affect 770,000 people, an official told CNN.

The administration had initially allowed those with FFEL loans to reorganize so that they would qualify for the $10,000 to $20,000 in waiver per borrower.

But as of Thursday, those who had not made the changes could no longer take advantage of them.

According to the report, the biggest legal threat to the program are the companies holding the loans.

They face losses if borrowers consolidate and move their loans to a loan directly owned by the government.

The original policy stated that the loans from FFEL and Perkins were eligible.

The Department of Education guidelines, updated on Thursday, stated, “As of September 29, 2022, borrowers with federal student loans who do not hold ED cannot obtain one-time debt relief by consolidating those loans into direct loans.”

The ministry is “assessing” whether “there are alternative avenues to provide assistance” to these borrowers, and “is discussing this with private lenders,” it said.

A spokesperson for the Ministry of Education said: “Our goal is to help as many eligible borrowers as quickly and easily as possible, and this will enable us to achieve that goal as we continue to explore additional legally available options.” to borrowers with private FFEL and Perkins loans, including whether FFEL borrowers could get one-time debt relief without having to consolidate.”

Experts told NPR that private banks dealing with losses may be filing a lawsuit to stop the loan forgiveness program by claiming they suffered damages.

The plan allows tens of millions of borrowers to wipe out $10,000 in student loans. Pell Scholarship Recipients Can Get $20,000 in Aid

The first lawsuit against the program, filed this week, was based on a plaintiff who showed damages by living in one of six states where loan forgiveness is taxed as income — a move that will hook people up for a tax bill, even while saving thousands. in debt.

The government has already denied that the program is voluntary, and the plaintiff can waive the $20,000 waiver.

A second lawsuit, filed Thursday by six GOP-led states, challenges the program by citing President Joe Biden’s comment on “60 Minutes” that the pandemic is “over.”

The courthouse moves come as the plan’s price tag is still coming into the picture, with a new Congressional Budget Office estimate this week saying the plan to lift student loan debt will be $400 in a decade. billion will cost.

The White House tried to downplay the hefty price tag with a memo pointing out that the estimate is based on 90 percent of eligible people enrolling in the program — far more than government officials had anticipated.

CBO called its own estimate ‘very uncertain’. We agree,” the White House said.

“CBO assumes that 90% of eligible borrowers are taking the necessary steps to claim waiver. We would be thrilled if 90% of eligible middle- and low-income Americans signed up for this program. But unfortunately that’s unlikely based on the data from other programs.’

Chief of Staff Ron Klain tweeted this week: “If you want apples-to-apples, note that this is a score of THIRTY; usually the CBO estimates the costs of a program over the first TEN years.’

Six Republican-led states SUE Biden to stop mass student loan forgiveness: Lawsuit uses its 60-minute ‘pandemic is over’ claim

Six Republican-led states filed a lawsuit in federal court on Thursday to nullify President Biden’s plan to provide up to $20,000 to individuals in the form of student loans — citing the president who, in his own words, is fighting the pandemic. called ‘past’.

The states have filed suit to halt the government’s plan to cancel student loan debt for tens of millions of Americans, because the government has overstepped its executive powers.

In any case, it is the second legal challenge this week against President Joe Biden’s sweeping proposal in late August, when he said his administration would forgive up to $20,000 in education debt for large numbers of borrowers.

Another lawsuit, filed Tuesday, is based on a plaintiff who qualifies for $20,000 in relief but doesn’t want to get stuck with tax liability for paying it off. Six states subject loan waivers to tax.

The courthouse moves come as the plan’s price tag is still coming into the picture, with a new Congressional Budget Office estimate this week saying the plan to lift student loan debt will be $400 in a decade. billion will cost.

The loan announcement, after months of internal deliberations and pressure from liberal activists, immediately became political fodder for the November midterms, while fueling conservative arguments over legality.

In the lawsuit, filed Thursday in a federal court in Missouri, Republican states argue that Biden’s cancellation plan is “not even remotely tailored to the effects of the pandemic on federal student loan borrowers,” as required by federal law enforcement. 2003 law that the administration uses as legal justification.

They point out that in an interview with CBS’ “60 Minutes” this month, Biden declared the Covid-19 pandemic over, but still uses the ongoing health emergency to justify the massive debt relief.

“It’s utterly unfair to burden hardworking Americans with the loan debt of those who chose to go to college,” Arkansas Attorney General Leslie Rutledge, who leads the group, said in an interview.

She added: ‘The Ministry of Education is legally obliged to collect the balance due on loans. And President Biden has no authority to override that.”

Arkansas Gov. Leslie Rutledge and five other GOP-led states are suing:

The unbiased Congressional Budget Office says Biden’s plan will cost America $400 billion over the next decade and the latest moratorium will increase loan debt by $20 billion