5 Growing Signs Biden Could Endorse Broad Student Loan Forgiveness and Extended Student Loan Pause

The ongoing pause on most federal student loan payments is set to end Aug. 31. And President Biden has also indicated that he will make a final decision on enacting broad student loan forgiveness by that date as well. Just weeks away from this key deadline, millions of student borrowers are facing unprecedented uncertainty as they await an official announcement.

While no decision has yet been publicly announced, there are growing signs that Biden is set to extend the student loan suspension and may also be preparing to endorse some form of large-scale cancellation. student loans.

Biden administration appears ready to implement student loan relief and an extension of the student loan suspension

As first reported by POLITICO, the Department of Education has procedures in place to implement a large-scale student loan forgiveness program. Biden just has to give the word. These procedures include mechanisms to automatically cancel federal student loans for potentially millions of borrowers, while allowing others to apply through a streamlined, self-certifying application process. The Department is also prepared to re-amortize reduced loan balances for borrowers whose student loans are not completely forgiven.

The establishment of these detailed procedures underscores that a massive student loan forgiveness program is under serious consideration. Biden is reportedly willing to forgive $10,000 in federal student loans for borrowers earning less than $125,000 a year.

In addition, the Department of Education reportedly notified its contracted loan managers not to issue billing notices to borrowers this month. With payments expected to resume in just weeks, the order is a clear sign that the administration does not plan to charge borrowers in the immediate future, especially since senior officials have promised borrowers advance notice. important before resuming payments.

Ongoing inflation makes it more likely to extend student loan suspension and other relief

Biden administration officials have said throughout the year that economic and pandemic data will guide the decision-making process on a further extension of the student loan suspension. And recent economic data on inflation doesn’t look rosy – prices continue to rise in a number of sectors. And this month’s jobs report, while robust, suggests the economy may still be too hot, according to top economists.

Advocates for student borrowers have repeatedly warned that ending the pause on student loans amid runaway inflation could be disastrous for families. Current economic data could provide a clear rationale for extending relief and possibly establishing new relief for borrowers as well.

Biden administration appears to endorse legal case for broad student loan forgiveness

Last month, the Biden administration suggested in court papers that it approved — at least to some extent — of a legal argument that the Secretary of Education has broad discretion to write off federal debt. student loan.

The filing was related to proceedings in the Sweet vs. DeVos case, a class action lawsuit filed by student loan borrowers over blocked claims for borrower defense against repayment (a program that can forgive federal student loan debt for borrowers defrauded by their school). As part of a joint settlement proposal, attorneys for the administration have suggested that the Compromise Authority of the Higher Education Act grant “considerable discretion” to the administration to write off student debt.

“The Secretary’s ‘compromise and settlement power’ includes the power to compromise and discharge student loan debts owed to him by Federal borrowers on terms determined by the Secretary,” the department wrote.

Advocacy groups, some student loan legal experts and progressives in Congress have repeatedly pointed to the Higher Education Act’s Compromise and Settlement Clause as a solid basis for Biden to use the government’s action. executive to enact broad student loan forgiveness. Of course, other experts disagreed with this broad interpretation, and the administration’s arguments in the filing appeared to be limited to “claims” made by the student borrower class.

Still, the filing provides insight into the administration’s legal arguments that could support a move by Biden to enact large-scale student loan forgiveness.

Republicans introduce bill to end student loan suspension and prevent mass student loan forgiveness

Last week, Republican Representatives Virginia Foxx, Elise Stefanik and Jim Banks introduced legislation designed to come out ahead of potential Biden student loan actions.

The bill, called Responsible Education Assistance Through Loan (REAL) Reforms Act, would end the ongoing student loan suspension and end student loan forgiveness for new borrowers under existing programs, including the Public Service Loan Remission (PSLF) and income-based repayment plans. . The bill would also expressly prohibit President Biden from writing off large-scale student loan debt.

The legislation has little to no chance of passing in the House and Senate, where Democrats hold narrow majorities. However, the bill’s introduction is a clear sign that Republicans are taking seriously that Biden appears to be moving toward enacting additional student loan relief for borrowers.

Biden has political momentum

Biden has won a string of political victories over the past two months. He recently signed several major bipartisan bills, including the CHIPS Act (which will increase semiconductor production in a bid to make the United States more competitive with China) and a gun control bill. fire. The Senate just passed the Cutting Inflation Act, which is set to become a historic federal investment in climate change mitigation and health care.

With several big wins — and potentially more on the way — Biden may feel emboldened to go big on other fronts, including student loan relief. That may be especially true given the approaching midterm elections, which will determine which party will control Congress for the second half of Biden’s term.

Further Reading on Student Loans

Court grants preliminary approval for $6 billion student loan forgiveness in landmark settlement

Biden administration ready to implement mass student loan forgiveness as decision could come any day

Did the Biden administration just drop a big hint on student loan forgiveness?

If You’ve Been To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do

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