Trump Administration Attempts To ‘box In’ Biden On Student Loan Forgiveness
The Trump administrations Education Department released a memo earlier this week arguing that student loan debt cancellation through executive action a potential move advocated by prominent Democrats but downplayed by President-elect Biden would be illegal.
The Education Secretary does not have the statutory authority to cancel, compromise, discharge, or forgive, on a blanket or mass basis, principal balances of student loans, and/or to materially modify the repayment amounts or terms thereof, the memo stated, at another point adding: Among other things, we must be mindful of the fact that the Executive Branch does not have the dispensing power on its own.
The content of the memo and timing suggested the outgoing administration was going to try to box in the Biden administration, Luke Herrine, a student loan expert and a PhD candidate at Yale, told Yahoo Finance. The fact that this is a memo that’s especially written to Betsy DeVos, who is no longer in office . I think it’s pretty clear that they were just trying to find a way to say with as much pomp and circumstance and authority as they can muster that they don’t agree with this interpretation.
John Brooks, law professor at Georgetown University Law Center, noted that while the memo itself isnt binding, the reading is clearly meant to influence the incoming Biden administration.
Elizabeth Warrens Student Loan Forgiveness Plan
Sen. Elizabeth Warren, D-Mass., one of the Democratic presidential candidates, has been very vocal about the student loan problem in America. And shes presented a bold plan to give borrowers relief.
With Elizabeth Warrens plan, the government would forgive up to $50,000 of student debt per individual. The exact amount forgiven would depend on the borrowers income.
Warren says her plan would erase all student debt for 75% of borrowers and would provide at least some relief for 95% of borrowers.
Borrowers with an income of under $100,000 would receive the full $50,000. After that, borrowers would receive less. Her plan caps out completely for borrowers who make $250,000 or more.
She also plans to pass a universal free college program, which would make all two-year and four-year public colleges tuition-free.
What Trump Has Done So Far
The Trump Administration implemented the year-round distribution of Federal Pell Grants, instead of limiting these grants to the spring and fall semesters.
Trump allowed federal student loan borrowers to temporarily suspend payments with no interest accruing due to the economic impacts of the coronavirus pandemic.
The Tax Cuts and Jobs Act in 2017 made death and disability discharge for student loans tax-free from January 1, 2018 to December 31, 2025.
The U.S. Department of Education has released an app version of the Free Application for Federal Student Aid .
The U.S. Department of Education provided $359.8 million in federal assistance to 20 states and the U.S. Virgin Islands to assist with the cost of educating students displaced by Hurricane Harvey, Irma, Maria, or the 2017 California wildfires.
The Trump Administration has issued regulations to limit the amount of student loan forgiveness available to defrauded borrowers who file a defense to repayment claim.
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Where Does Biden Stand On Forgiving Student Loan Debt Right Now
During his presidential campaign, Biden called for forgiving $10,000 of federal student loan debt per person. He also laid out additional plans for college students in the Biden Plan for Education Beyond High School, such as free tuition and more money for federal grants.
Additionally, we should forgive a minimum of $10,000/person of federal student loans, as proposed by Senator Warren and colleagues. Young people and other student debt holders bore the brunt of the last crisis. It shouldn’t happen again.
Shortly after taking office, Biden signed an executive order to extend the pause on student loan payments and interest till the end of September. Former President Donald Trump initially suspended payments at the start of the pandemic, and the loan suspension was extended twice more.
In Biden’s American Rescue Plan, a provision removed any tax penalty if student loans are forgiven. The IRS treats debt discharged for less than what’s owed as taxable income. This would apply to both government and private loans. The forgiveness provision lasts until Dec. 25, 2025. However, as president, Biden has yet to formally forgive additional student loan debt.
It’s important to keep in mind that there has been no movement on loan debt cancellation yet, but there is a growing number of scammers claiming they can help you with student loan forgiveness.
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Here Are The Other Moves The Trump Administration Has Made:
- The government shouldnt be earning money on student loansthe only fix to this would be to reduce the interest rate for federal loans moving forward
- Drop the Public Service Loan Forgiveness program
- Push colleges to cut tuition by decreasing high administrative costs
- Reduce federal regulations on colleges to decrease their compliance expenses so they can pass those additions along to students
- Universities will be assumed to contribute all of their endowment money going forward on their students to hold tuition low and cut student debt or risk losing their federal tax breaks
- Potential tax-exempt status for big university endowments if schools dont start making their degrees extra affordable for students
If he does adjust the IDR program as he has recommended, those interested in Income-Driven Repayment plans would have a bigger monthly payment, Though forgiveness would happen sooner.
Here are the important questions:
Here are the important notable questions:
- No specifying of tax implications on forgiven student loan amounts
- No specifying of bankruptcy reforms
So how will this change your student loans going forward? What should you do concerning it?
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What Did Biden Promise To Do For Student Borrowers
During his campaign, Biden called for:
Forgiving $10,000 in federal student-loan debt for every borrower.
Forgiving all of the undergraduate student debt accrued by borrowers who attended public colleges or minority-serving nonprofit colleges.
Expanding the existing Public Service Loan Forgiveness program by canceling $10,000 a year in student debt for every year a borrower works in a public-sector or nonprofit job, for up to five years.
Meanwhile, to address the underlying college-affordability crisis, Biden proposed making public colleges tuition-free for students from households earning less than $125,000 a year and increasing Pell Grants.
Other Democrats have proposed a more sweeping debt jubilee: Senate Majority Leader Chuck Schumer and Democratic senator Elizabeth Warren have called on Biden to forgive $50,000 in federal student-loan debt for every borrower through executive action which is to say, without congressional approval.
Biden has rejected this proposal on both substantive and procedural grounds. The president said in February, I dont think I have the authority to by signing the pen. He has separately maintained that $50,000 is too high a sum, especially given the relatively high incomes of Americans who graduate from high-tuition colleges.
Only $10000 Direct Forgiveness
Although the Democrats are pushing the administration to grant $50,000, this amount seems highly unlikely. Additionally, President Biden only supported $10,000 forgiveness before he was elected. He never supported $50,000, nor did he claim forgiveness would be granted through executive action.
So, will student loans be forgiven? Even if forgiven, you will be better off expecting a lower amount- $10,000 forgiveness. Sure, it can eliminate 100% of the debt of 16 million borrowers. However, do not tie all your hopes to this announcement.
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Trump Signs Order To Eliminate Student Loan Debt For Disabled Vets
WASHINGTON President Donald Trump on Wednesday announced a new plan to eliminate student loan debt for disabled veterans.
The debt of disabled veterans will be entirely erased, Trump said in a speech at the 75th annual American Veterans convention in Louisville, Kentucky. In a few moments, I will sign a memorandum directing the Department of Education to eliminate every penny of federal student loan debt owed by American veterans who are completely and permanently disabled.
At the conclusion of his remarks, Trump stayed on stage to sign the executive order in front of the crowd of several hundred veterans gathered for the convention in the Galt House Hotel.
The debt of these disabled veterans will be entirely erased. It will be gone,” Trump said. “Sleep well tonight.”
Trump, who was accompanied on his trip by Education Secretary Betsy DeVos, among others, said that his proposal would eliminate an average of $30,000 for each of the more than 25,000 eligible veterans “who have made immense sacrifices, the ultimate sacrifice in many ways for our nation.
That’s hundreds of millions of dollars in student debt held by our severely wounded warriors. It’s gone forever, he said.
Trump kicked off the beginning of his speech joking that he’d weighed giving himself a Medal of Honor, the highest recognition that can be awarded to those who’ve served in the military.
Student Loan Forgiveness Options You Might Be Able To Get
However, they’re not so widely available — or quick to receive.
Public Service Loan Forgiveness is a government program intended to forgive federal direct student loans if the borrower has a job with the government or a nonprofit organization, after 120 qualifying on-time payments in an income-driven repayment plan. This means after 10 years of making payments, the government is supposed to forgive the balance. However, many borrowers who believe they’re qualified for forgiveness are having trouble getting approved.
In 2019, there were more than 41,000 PSLF applications — and 206 were approved by the Department of Education. Many were denied due to errors, but a 2020 report from the nonprofit Student Borrower Protection Center found the department’s Office of Federal Student Aid had mischaracterized employers, causing applicants to be ineligible. Since the PSLF began in 2007, 98.8% of applications have not been approved, according to the center.
Borrowers who took out loans to become teachers can get their Perkins, Stafford or Direct loans partially forgiven. The amount varies depending on what subjects they teach, what schools they teach at and how long they’ve been teaching.
And lastly, borrowers who are on an income-driven repayment plan — in which the monthly payments are no more than 10% of a person’s discretionary income — can have their remaining loan balance forgiven after 20 years for undergraduates, or 25 years for graduate students.
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Total And Permanent Disability Discharge
Another area of improvement has been the Total and Permanent Disability Discharge program. This program offers 100% forgiveness to borrowers who could prove their disabilities. In addition, it is possible to get required disability documentation from Veteran Affairs, Social Security Administration, and a physician.
The Education Department under Bidens Presidency has also helped thousands of disabled borrowers. Recently in August, more than 320,000 borrowers received a full discharge. In total, a $5.8 billion loan discharge was granted to debtors who automatically became eligible.
Us Department Of Education Announces $20 Million In American Rescue Plan Grants To Promote American Indian Resilience In Education For Native Communities During Pandemic
Advancing its commitment to equity, meaningful consultation, and relief for Tribal Nations, the U.S. Department of Education announced approximately $20 million in grants to Tribal Educational Agencies to meet the urgent needs of students in response to the coronavirus pandemic.
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Apply Immediately If You Are Eligible
As you are already familiar with the prospering opportunities, the first thing to do is check if you are eligible for any of these options. For example, if your school misled you, try to gather all evidence and develop a sound argumentation.
Besides these two programs, other forgiveness opportunities still exist, and they are more effective than ever. It is one of the best times to apply for debt forgiveness programs while the administration is in support of existing options. Before worrying about immediate forgiveness, which does not seem highly likely, try to explore your existing debt resolution strategies.
Lifetime Learning Credit Being Axed
This turns into a deduction of up to $2,000, which could be done for many years as you had education expenses. The big separation between the American Opportunity Tax Credit & the Lifetime Learning Credit is the latter allows for deductions based on vocational costs. By eliminating this tax credit it is harming those who want to develop their skill and gain valuable hands-on training in a field that may not be available at a traditional university
What should borrowers do, if Trump & DeVos would take Public Service Loan Forgiveness away?
For borrowers who are suited for PSLF, instantly guarantee that your loans are in the Direct Loan Program
If you are in the Direct program verify your employment status instantly.
These moves alone will not ensure that borrowers will get PSLF, but being in the program prior to any law reforms is expected to develop your chances of getting it considerably.
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Trump Administration Tries To Hamstring Biden On Student Loan Forgiveness
Education Department officials released a memo that concludes that the agency lacks the power to unilaterally forgive federal student loan debt on the scale that some Democrats want.
In this May 17, 2018, file photo, new graduates line up before the start of the Bergen Community College commencement at MetLife Stadium in East Rutherford, N.J. | Seth Wenig, File/AP
01/13/2021 06:23 PM EST
The Trump administration on Wednesday sought to throw up a bureaucratic roadblock to progressives push for the incoming Biden administration to cancel large swaths of outstanding student loan debt through executive action.
Education Department officials released a memo, signed by an outgoing political appointee, that concludes that the agency lacks the power to unilaterally forgive federal student loan debt on the scale that some Democrats want.
The eight-page memo says that the Secretary does not have statutory authority to provide blanket or mass cancellation, compromise, discharge, or forgiveness of student loan principal balances, and/or to materially modify the repayment amounts or terms thereof, whether due to the COVID-19 pandemic or for any other reason.
The document was signed on Tuesday evening by Reed Rubinstein, who is serving as the acting general counsel of the Education Department. It was first reported by the Wall Street Journal.
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Student Debt Forgiveness As Part Of Biden’s New Deal
While the pressures of COVID-19 give lawmakers additional reasons to make college more affordable, free-college plans would likely still struggle to be passed by Congress. Debt forgiveness, on the other hand, could be done “with the pen as opposed to legislation.”
In the first days of what Senator Schumer says could be a Franklin D. Roosevelt-style presidency, Biden could provide total forgiveness to more than 75% of borrowers.
bold plan for the next President of the United States to use existing authority under the Higher Education Act to cancel up to $50,000 in federal student loan debt for federal student loan borrowers. Source: Senate Democratic Leader Chuck Schumer and Senator Elizabeth Warren Link: More Info
Proponents of debt forgiveness say a generous write-off would stimulate the economy. According to a 2017 report from the Federal Reserve System, students making payments on loans for their education paid almost $400 per month, on average. Additionally, with more than a quarter of Americans behind on loan payments, canceling student debt could help provide relief for millions of households.
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