Biden to launch additional student loan aid this week – but borrowers demand full cancellation
The Biden administration is taking action this week to provide additional student loan relief that could impact hundreds of thousands of borrowers. But borrowers and student loan advocates say it’s not enough.
Today, the United States Department of Administration announced it will ease heavy bureaucratic requirements for student loan borrowers whose student loans have been canceled due to a medical disability. The Total Permanent Disability (TPD) Exit Program allows student loan borrowers who are unable to maintain substantial gainful employment due to a medical impairment to have their student loans canceled.
However, to keep their student loans in discharged status, most DPT borrowers must submit ongoing annual documents for three years after release to certify their employment status and income (if applicable). Failure to respond to requests from the Department of Education may result in the reinstatement of released loans. The vast majority of student instant loan disability discharges that were canceled were due to the failure of a disabled borrower to respond and submit the required documents.
The Biden administration today announced that the Education Department will waive paperwork requirements during the so-called post-discharge monitoring period for the TPD discharge program during the course of the COVID-19 pandemic in Classes. The change will be retroactive to March 2020, when the pandemic emergency was first declared. Student loan borrowers who have had their disability leave canceled (and their student loans reinstated) due to failure to send the required documents during their post-discharge follow-up period will be eligible for repayment of their loans. In total, approximately 230,000 student loan borrowers will be affected, including 41,000 borrowers whose discharge has been canceled.
Advocates for student loan borrowers have criticized the White House for failing to take bolder steps to improve the disability release program, such as automating the relief of disabled borrowers, rather than forcing those borrowers to cross debt. bureaucratic obstacles. “Even the Trump administration has automated debt relief for veterans determined to be totally and permanently disabled,” said Alex Elson, lawyer and co-founder of the student loans advocacy group, Student Defense. “There is absolutely no reason why the Biden administration should refuse to do the same. The Ministry should abandon the negotiated regulations and publish a new regulation that automates the discharges for these borrowers. ”
The Biden administration also plans to announce additional student loan relief this week: an extension of emergency student loan protections to potentially cover additional student loans. Currently, collections on overdue federal student loans have been suspended under the CARES Act, which President Biden extended until September 30, 2021. However, only federal student loans held by the government are subject to the suspension. recoveries. Collection activities may continue against student loan borrowers who have defaulted on federal student loans that are not held by the government, such as Family Federal Education Loan (FFEL) program loans held by guarantee agencies and federal Perkins loans held by schools. An extension of the moratorium on collections to these other types of federal loans could benefit borrowers who experience wage garnishment and other collection activity, but relief may be limited only to borrowers in default. The White House has yet to release official details.
This week’s steps are the latest in a series of steps the new administration has taken to address the student loan problem. On the first day of his term, President Biden signed an executive order extending the moratorium on most federal student loan payments and interest until September 30, 2021. Subsequently, Biden enacted his new stimulus package, the “American Rescue Plan”, which will exempt student loan cancellation and forgiveness from tax under federal law until the end of 2025. Progressive lawmakers have welcomed this provision as “paving the way” for Biden to cancel student debt.
Last week, Secretary Cardona announced a policy change to the borrower’s repayment defense program that will result in Student loan cancellation for 72,000 student borrowers; the total amount of the student loan forgiveness is should be around $ 1 billion. Also last week, Cardona also released new guidelines allowing colleges to use stimulus funds to cancel institutional student debt in certain situations.
These changes were relatively rapid, but also gradual, providing only temporary relief in some cases or, if more permanent, relief that only helps tiny subgroups of over 40 million. student borrowers. Advocates of student loan borrowers have praised the administration’s efforts, but continue to push Biden to go much further to provide lasting relief to millions of student loan borrowers.
“The move away from partial relief is a good start for a small subset of borrowers,” Toby Merrill, director of the Predatory Student Loans Project, said in a statement following the changes made by the administration to the borrower advocacy program. “But what we need from the Department of Education is an overhaul of the current borrower advocacy process … The Biden-Harris administration must now either remedy these failings or else perpetuate a system that opposes the very students they are meant to protect. ”
Borrower advocates have argued for months that the best way forward in dealing with the student debt crisis is not gradual reform, but widespread student loan forgiveness. “Today’s announcement demonstrates the failure of Department of Education programs designed to relieve vulnerable borrowers and the need for widespread student debt cancellation,” said Persis Yu of the National Consumer Law Center in a press release.
Student loan borrower activists, advocacy groups and progressive congressional lawmakers have been pushing President Biden to write off student debt through executive action for months. Biden supports blanket student loan cancellation, but he has repeatedly indicated that he prefers Congress to pass student debt cancellation through legislation, rather than act unilaterally through an executive order.
While many student loan legal experts have argued that Biden has the power to enact a blanket student loan cancellation through executive action, Department of Education attorneys under former Secretary DeVos came to the opposite conclusion, and Biden expressed deep uncertainty about this path. He asked lawyers for the US Department of Justice to review the legality of the executive’s action.
The president has repeatedly said he will support $ 10,000 in student loan cancellation for borrowers, while student loan advocacy groups have pushed him to cancel $ 50,000 or more. Biden says he opposes the $ 50,000 figure.