If Biden doesn’t cancel student loan debt, could he do it instead?

The Biden administration is currently conducting a legal review to determine whether the president has the power to write off student debt. The review is ongoing and the White House has not indicated what the results might be, although we may find out soon.

But in the end, the big question of whether Biden will actually write off student loan debt remains unanswered. Biden has always expressed support for a broad student loan cancellation, but he has pushed back on proposals to cancel $ 50,000 or more in student loans, as some Democratic lawmakers and advocacy organizations have called for. Biden and others in his administration have argued that a lower level of student debt forgiveness – like around $ 10,000 – would target relief towards those with low incomes. $ 10,000 student loan forgiveness would eliminate all student loans outstanding for more than 16 million people, and would reduce the balances of an additional 9 million borrowers by 50 percent.

Yet even if Biden ended up unilaterally canceling $ 10,000 in student loan debt, two-thirds of the more than 40 million student loan borrowers across the country are still expected to repay their loans. And it’s not clear at this point whether or not Biden will write off an amount of student loan debt. If Biden doesn’t cancel your student loan debt, his administration could take other steps that could benefit millions of student loan borrowers.

Public Service Loan Forgiveness Fixes

During his presidential campaign last year, Biden has repeatedly indicated that he supports the overhaul of the Public Service Loan Forgiveness Program (PSLF), which has been plagued by low approval rates, poor administrator management and complex eligibility criteria that excluded millions of borrowers from the program. Biden had proposed to make all federal student loans and repayment plans eligible for the PSLF, rather than limiting relief to direct loans that are repaid under income-based repayment plans, as is currently the case. the case. He also suggested a partial forgiveness of loans for each year of public service over the 10-year program, rather than leaving borrowers to wait until the end of the 10-year service period to gain a significant benefit.

A bill called “What You Can Do For Your Country Act,” sponsored by Senators Kirsten Gillibrand (D-NY) and Tim Kaine (D-VA), is said to have solved many problems associated with the service loan forgiveness program. public (PSLF), though the legislation never went anywhere, and it’s unclear whether it could pass the Senate now with a slim Democratic majority and filibuster, allowing the minority party to block most laws. It is possible that Biden could make significant changes to the PSLF through executive action, such as drafting new regulations governing the program under existing laws.

Borrower defense enhancements for defrauded borrowers

The Borrower’s Repayment Defense program provides debt relief to students who have been misled, defrauded, or otherwise harmed by predatory colleges and universities – often for-profit schools. However, former Education Secretary Betsy DeVos created new regulations governing the program that significantly weakened the relief given to student loan borrowers by increasing the burden of proof required to prevail, imposing criteria for partial relief and enacting a strict limitation period. Last year, the Education Department told a federal court that 94% of borrower’s defense claims were dismissed.

President Biden recently reversed part of DeVos’ borrower defense policies by providing full relief to borrowers whose debt cancellation had been approved, rather than the partial relief that DeVos had approved. This is expected to translate into nearly $ 1 billion in student loan cancellation for 72,000 borrowers. Biden could go even further, however, by completely overturning DeVos-era borrower defense regulations, swiftly approving pending borrower defense claims who are eligible for redress, and ending pending class actions. against the Department of Education on terms favorable to student borrowers (lawsuits that the Biden administration has, so far, continued to defend in court).

New income-driven repayment plan

During last year’s presidential campaign, Biden proposed to simplify the current system of income-based reimbursement plans, which consists of a complex range of individual programs each with their own eligibility criteria, calculation formulas. of payment and terms of office. Biden had called for a new income-focused plan that would effectively replace existing plans and require borrowers to pay only 5% of their discretionary income for their student loans, rather than the 10-20% currently required in existing programs such as than income-based repayment. (ICR), Income Based Reimbursement (IBR) and Pay As You Earn (PAYE). If implemented, this new repayment plan would reduce payments to the most affordable income-based plans by 50% or more.

Biden could potentially create a new income-focused plan through the regulatory process, rather than having to rely on legislation passed by Congress. The Obama administration created Pay As You Earn (PAYE) and Revised Pay as You Earn (REPAYE) through this executive process, so there is a clear precedent in this regard.

Changes in interest on student loans

Temporary suspension of payments and interest on student loans initiated by President Trump in response to the Covid-19 emergency, then extended by President Biden, illustrates the power of the White House to take unilateral action on student loans federal. The Biden administration has indicated that payments will likely resume on federal student loans after the current expiration date of September 30, 2021. But it is possible that Biden could take further action regarding student loan interest, for example. by extending the interest freeze beyond September 30. , even if payments resume.

Further reading

Will Biden cancel student loan debt? We may soon know

Biden Student Loan Forgiveness Review: Should You Take Action Now To Get Student Debt Cancellation Later?

College Cancels Student Loan Debt Using Biden Stimulus Bill Money

If you’ve paid off your student loans, you may be eligible for a refund