Biden administration to cancel student loan debt for at least 40,000 borrowers. SCOTUS strikes down Biden’s student loan relief plan
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One way or another, the Republicans are screwed with generation Z and most millennials. They are really going to be pissed if they don’t let this go through.
Roberts pointed to the wide impact and expense of the program, three times saying it would cost “a half-trillion dollars.” The program is estimated to cost $400 billion over 30 years.
“If you're talking about this in the abstract, I think most casual observers would say if you're going to give up that much ... money. If you're going to affect the obligations of that many Americans on a subject that's of great controversy, they would think that's something for Congress to act on,” Roberts said.
Kavanaugh suggested that the administration was using an “old law” to unilaterally implement a debt relief program that Congress had rejected. He said the situation was familiar: "in the wake of Congress not authorizing the action, the executive nonetheless doing a massive new program.”
That, he said, “seems problematic.”
Even the group that it's supposed to harm wasn't there to say how it would harm them. I want to see how narrow they want to make this BS
“If you're talking about this in the abstract, I think most casual observers would say if you're going to give up that much ... money. If you're going to affect the obligations of that many Americans on a subject that's of great controversy, they would think that's something for Congress to act on,” Roberts said.
Kavanaugh suggested that the administration was using an “old law” to unilaterally implement a debt relief program that Congress had rejected. He said the situation was familiar: "in the wake of Congress not authorizing the action, the executive nonetheless doing a massive new program.”
That, he said, “seems problematic.”
Even the group that it's supposed to harm wasn't there to say how it would harm them. I want to see how narrow they want to make this BS
The price tag should not have any bearing on if the plaintiffs have been injured. BTW 400 Billion in PPP loans were forgiven authorized by the SBA.
Sanders at Supreme Court: "IN AMERICAN YOU SHOULDN'T HAVE TO FACE FINANCIAL RUIN BECAUSE YOU WANT A DAMN EDUCATION!"
SCOTUS Weighs in on Student Loan Forgiveness
SoFi Technologies (SOFI) rose as much as 4% in afternoon trading on Tuesday following reports that conservative justices were skeptically questioning President Biden's plan to forgive billions of dollars of student debt.
SoFi is a known player for refinancing student loans, with SA contributors like Data Driven Investing recently pointing out that growth at its lending arm should accelerate again when the student loan moratorium expires in the back half of the year.
Other related stocks were less affected by the opening arguments at SCOTUS, such as Navient (NAVI), Nelnet (NNI), and SLM Corp. (SLM), which closed the session around the flatline.
Our Take: Chief Justice John Roberts led the conservative justices, who comprise a majority of the court, in examining whether the Biden administration has the authority to cancel federal student loans as a result of the COVID-19 emergency.
Roberts, in his questioning of the White House's top Supreme Court lawyer, suggested that the administration had exceeded its authority. Roberts also contended that a program as large as Biden's student loan forgiveness plan, which is estimated to cost $430B over three decades, should be something that casual observers would expect Congress to take up.
"If you're going to affect the obligations of that many Americans on a subject that's of great controversy, they would think that's something for Congress to act on," he said.
SoFi Technologies (SOFI) rose as much as 4% in afternoon trading on Tuesday following reports that conservative justices were skeptically questioning President Biden's plan to forgive billions of dollars of student debt.
SoFi is a known player for refinancing student loans, with SA contributors like Data Driven Investing recently pointing out that growth at its lending arm should accelerate again when the student loan moratorium expires in the back half of the year.
Other related stocks were less affected by the opening arguments at SCOTUS, such as Navient (NAVI), Nelnet (NNI), and SLM Corp. (SLM), which closed the session around the flatline.
Our Take: Chief Justice John Roberts led the conservative justices, who comprise a majority of the court, in examining whether the Biden administration has the authority to cancel federal student loans as a result of the COVID-19 emergency.
Roberts, in his questioning of the White House's top Supreme Court lawyer, suggested that the administration had exceeded its authority. Roberts also contended that a program as large as Biden's student loan forgiveness plan, which is estimated to cost $430B over three decades, should be something that casual observers would expect Congress to take up.
"If you're going to affect the obligations of that many Americans on a subject that's of great controversy, they would think that's something for Congress to act on," he said.
Student loan forgiveness: Key statements from each justice
The high-stakes battle over President Biden’s student debt relief plan reached the Supreme Court on Tuesday, with each justice giving a glimpse into their thinking during back-to-back oral arguments.
Biden’s plan appears in peril after the court’s conservative majority cast doubt on the administration’s authority to forgive up to $20,000 in student debt for qualifying borrowers in two separate challenges.
The case more broadly touched on a number of legal issues — states’ ability to challenge administration policies they don’t like and the scope of executive authority — that revealed insights into each justice’s approach to cases.
Here’s a key statement from each justice during Tuesday’s arguments:
John Roberts
Chief Justice of the United States John Roberts arrives before President Joe Biden delivers the State of the Union address to a joint session of Congress at the Capitol, Tuesday, Feb. 7, 2023, in Washington. (Jacquelyn Martin, Pool)
“We’re talking about half a trillion dollars and 43 million Americans. How does that fit under the normal understanding of ‘modifying’?“
Roberts, the chief justice, near the start of the first argument pressed U.S. Solicitor General Elizabeth Prelogar on how the HEROES Act justifies cancelling hundreds of billions of dollars in debt.
The law, which the administration cites as authorizing the plan, enables the education secretary to “waive or modify” federal student financial assistance programs in connection with national emergencies — in this instance, the pandemic.
But Roberts repeatedly stressed the plan’s price tag, quoting the late conservative Justice Antonin Scalia as defining “modify” as “moderate change” and questioning how Biden’s plan falls under that definition.
Clarence Thomas
Supreme Court Justice Clarence Thomas delivers a keynote speech during a dedication of Georgia new Nathan Deal Judicial Center in Atlanta, Feb. 11, 2020. (Associated Press/John Amis)
“Could you explain then, in other provisions there is express language as to cancellation, and, of course, there isn’t here.”
Like most oral arguments, Thomas became the first justice to ask a question before remaining fairly quiet afterward.
Thomas leveraged the opportunity to kick off the high-stakes argument by noting other statutes that explicitly refer to debt cancellation. He compared that to how the administration is justifying their plan as merely a waiver and modification.
It became the first of many moments in which the court’s conservatives appeared to invoke the “major questions” doctrine, which requires Congress to speak clearly when authorizing an agency to take actions with vast economic and political significance.
In his only other line of questioning to the solicitor general during the first case, Thomas noted the difference between past uses of the HEROES Act to pause student loan payments during the pandemic.
“Forbearance fits more comfortably in waive or modify language,” Thomas said. “It’s you simply forbearing on collecting an underlying debt, but you don’t cancel the debt. And that’s what we’re talking about here.”
Neil Gorsuch
Gorsuch gave Campbell an opportunity to challenge some of the Biden administration’s claims about the student debt relief program. (Greg Nash)
“I understand the Secretary has considerable expertise when it comes to educational affairs, but in terms of macroeconomic policy, do we normally assume that every Secretary, cabinet member, as learned as they are, has that kind of knowledge?”
Gorsuch gave Nebraska Solicitor General James Campbell, who represented the state challengers, an opportunity to push back on the administration’s assertion that the Education Department has the expertise to exert authority over debt relief.
The administration insists that since the Education Department is given authority to forgive student debt in other contexts, Congress had foreseen the possibility of debt relief when it gave the department emergency authority under the HEROES Act.
“No, we don’t. When we’re dealing with a nearly half-trillion dollar loan cancellation program, this is squarely in the ken of Congress,” Campbell responded to Gorsuch’s question.
Brett Kavanaugh
Kavanaugh appeared wary of using executive authority for the cancellation of student debt during his arguments. (Getty)
“Some of the biggest mistakes in the Court’s history were deferring to assertions of executive emergency power. Some of the finest moments in the Court’s history were pushing back against presidential assertions of emergency power.“
Kavanaugh’s views on the limits of executive power were a frequent topic in his confirmation hearings, but he appeared wary on Tuesday of using executive authority for a massive cancellation of student debt.
He referenced an amicus brief from a Fordham Law School Professor Jed Handelsman Shugerman, who called the plan a “case study” for how administrations abuse emergency powers
“And that’s continued not just in the Korean War but post-9/11 in some of the cases there,” Kavanaugh continued. “So, given that history, there’s a concern, I suppose, that I feel at least, about how to handle an emergency assertion.”
Samuel Alito
Alito pressed Prelogar on why the Biden administration considers the student debt program to be fair. (Stefani Reynolds)
“Why is it fair? If it was, if you didn’t have to do it? Why is it in the answer to say that it was warranted? Maybe it was warranted, but why was it done? I guess you don’t want to answer the question.”
Alito again proved his reputation as a searing questioner during the second argument, a challenge from two individual borrowers who did not qualify for the full $20,000 in relief.
He pressed Prelogar on why the administration believes the plan is fair, asking multiple times and expressing dissatisfaction with Prelogar’s answers in each iteration.
Alito stressed that the administration was not legally required to forgive the debts, so it is legitimate to inquire about the view of how the Education Department evaluated the plan’s fairness.
“All right. I’ll try one more time. Why was it fair to the people who didn’t get arguably comparable relief?” Alito later asked.
Sonia Sotomayor
Sotomayor emphasized the challenges that student borrowers may face without receiving debt relief. (Getty)
“There’s 50 million students who will benefit from this, who today will struggle.”
Sotomayor during a 2017 interview described a “continuing tension” in the U.S. between people who believe everyone must pull themselves up, and those who believe societal inequalities build barriers that must be struck down for some people to “have a chance.”
In a similar vein on Tuesday, she highlighted at length the harms that some student borrowers could face without debt relief.
“Many of them don’t have assets sufficient to bail them out after the pandemic,” Sotomayor added. “They don’t have friends or families or others who can help them make these payments. The evidence is clear that many of them will have to default.”
“Their financial situation will be even worse because once you default, the hardship on you is exponentially greater,” she continued. “You can’t get credit. You’re going to pay higher prices for things. They are going to continue to suffer from this pandemic in a way that the general population doesn’t.”
Elena Kagan
Kagan used a hypothetical situation involving an earthquake to make a point about the utilization of emergency authority. (Stefani Reynolds)
“Congress doesn’t get much clearer than that. We deal with congressional statutes every day that are really confusing. This one is not.”
Kagan expressed in blunt terms her views on the clarity of the HEROES Act.
She went on to ask Campbell, who represented the states, a hypothetical involving an earthquake, repeatedly stressing the value of emergency authority.
“This isn’t a massive delegation to the Secretary of Education. It’s designed to deal with emergency conditions. You have a lot of power in emergencies. When those people’s homes are destroyed, you have the power to discharge their loans.”
Ketanji Brown Jackson
Supreme Court nominee Ketanji Brown Jackson answers questions during the third day of her Senate Judiciary Committee confirmation hearing on Wednesday, March 23, 2022.
Supreme Court nominee Ketanji Brown Jackson answers questions during the third day of her Senate Judiciary Committee confirmation hearing on Wednesday, March 23, 2022. (Greg Nash)
“I feel like we really do have to be concerned about jumping into the political fray, unless we are prompted to do so by a lawsuit that is brought by someone who has an actual interest.“
After a number of her colleagues raised alarm about executive overreach, Jackson during the final line of questioning in the states’ challenge noted that the judiciary, too, is part of the separation of powers dynamic.
Jackson tied her point to her concerns about giving the challengers standing, suggesting that it would improperly lead the courts to encroach on the political branches of government.
Amy Coney Barrett
Barrett notably broke with her fellow conservative justices in questioning Missouri’s argument. (Bonnie Cash)
“If MOHELA is an arm of the state, why didn’t you just strong-arm MOHELA and say you’ve got to pursue this suit?”
Before the court reaches the merits, they first must establish that a challenger has standing, meaning the legal capacity to sue. Missouri’s standing theory received the most attention.
Barrett’s questioning broke with her conservative colleague’s sympathy towards Missouri’s argument, and it instead more closely mimicked the skepticism of the court’s liberals.
The debate revolves around whether the Higher Education Loan Authority of the State of Missouri (MOHELA) is an arm of Missouri, or if MOHELA’s purported revenue losses from the debt cancellation would cause it to miss out on payments it owes to the state treasury.
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The court’s liberals noted that MOHELA itself had the capacity to sue, but it didn’t.
“Why didn’t the state just make MOHELA come then, if MOHELA is really an arm of the state?” asked Barrett. “And all of this would be a lot easier.”
But even if Barrett and the three liberals reject that the challengers have standing, the five remaining conservatives could still deliver the debt relief plan’s fatal blow.
The high-stakes battle over President Biden’s student debt relief plan reached the Supreme Court on Tuesday, with each justice giving a glimpse into their thinking during back-to-back oral arguments.
Biden’s plan appears in peril after the court’s conservative majority cast doubt on the administration’s authority to forgive up to $20,000 in student debt for qualifying borrowers in two separate challenges.
The case more broadly touched on a number of legal issues — states’ ability to challenge administration policies they don’t like and the scope of executive authority — that revealed insights into each justice’s approach to cases.
Here’s a key statement from each justice during Tuesday’s arguments:
John Roberts
Chief Justice of the United States John Roberts arrives before President Joe Biden delivers the State of the Union address to a joint session of Congress at the Capitol, Tuesday, Feb. 7, 2023, in Washington. (Jacquelyn Martin, Pool)
“We’re talking about half a trillion dollars and 43 million Americans. How does that fit under the normal understanding of ‘modifying’?“
Roberts, the chief justice, near the start of the first argument pressed U.S. Solicitor General Elizabeth Prelogar on how the HEROES Act justifies cancelling hundreds of billions of dollars in debt.
The law, which the administration cites as authorizing the plan, enables the education secretary to “waive or modify” federal student financial assistance programs in connection with national emergencies — in this instance, the pandemic.
But Roberts repeatedly stressed the plan’s price tag, quoting the late conservative Justice Antonin Scalia as defining “modify” as “moderate change” and questioning how Biden’s plan falls under that definition.
Clarence Thomas
Supreme Court Justice Clarence Thomas delivers a keynote speech during a dedication of Georgia new Nathan Deal Judicial Center in Atlanta, Feb. 11, 2020. (Associated Press/John Amis)
“Could you explain then, in other provisions there is express language as to cancellation, and, of course, there isn’t here.”
Like most oral arguments, Thomas became the first justice to ask a question before remaining fairly quiet afterward.
Thomas leveraged the opportunity to kick off the high-stakes argument by noting other statutes that explicitly refer to debt cancellation. He compared that to how the administration is justifying their plan as merely a waiver and modification.
It became the first of many moments in which the court’s conservatives appeared to invoke the “major questions” doctrine, which requires Congress to speak clearly when authorizing an agency to take actions with vast economic and political significance.
In his only other line of questioning to the solicitor general during the first case, Thomas noted the difference between past uses of the HEROES Act to pause student loan payments during the pandemic.
“Forbearance fits more comfortably in waive or modify language,” Thomas said. “It’s you simply forbearing on collecting an underlying debt, but you don’t cancel the debt. And that’s what we’re talking about here.”
Neil Gorsuch
Gorsuch gave Campbell an opportunity to challenge some of the Biden administration’s claims about the student debt relief program. (Greg Nash)
“I understand the Secretary has considerable expertise when it comes to educational affairs, but in terms of macroeconomic policy, do we normally assume that every Secretary, cabinet member, as learned as they are, has that kind of knowledge?”
Gorsuch gave Nebraska Solicitor General James Campbell, who represented the state challengers, an opportunity to push back on the administration’s assertion that the Education Department has the expertise to exert authority over debt relief.
The administration insists that since the Education Department is given authority to forgive student debt in other contexts, Congress had foreseen the possibility of debt relief when it gave the department emergency authority under the HEROES Act.
“No, we don’t. When we’re dealing with a nearly half-trillion dollar loan cancellation program, this is squarely in the ken of Congress,” Campbell responded to Gorsuch’s question.
Brett Kavanaugh
Kavanaugh appeared wary of using executive authority for the cancellation of student debt during his arguments. (Getty)
“Some of the biggest mistakes in the Court’s history were deferring to assertions of executive emergency power. Some of the finest moments in the Court’s history were pushing back against presidential assertions of emergency power.“
Kavanaugh’s views on the limits of executive power were a frequent topic in his confirmation hearings, but he appeared wary on Tuesday of using executive authority for a massive cancellation of student debt.
He referenced an amicus brief from a Fordham Law School Professor Jed Handelsman Shugerman, who called the plan a “case study” for how administrations abuse emergency powers
“And that’s continued not just in the Korean War but post-9/11 in some of the cases there,” Kavanaugh continued. “So, given that history, there’s a concern, I suppose, that I feel at least, about how to handle an emergency assertion.”
Samuel Alito
Alito pressed Prelogar on why the Biden administration considers the student debt program to be fair. (Stefani Reynolds)
“Why is it fair? If it was, if you didn’t have to do it? Why is it in the answer to say that it was warranted? Maybe it was warranted, but why was it done? I guess you don’t want to answer the question.”
Alito again proved his reputation as a searing questioner during the second argument, a challenge from two individual borrowers who did not qualify for the full $20,000 in relief.
He pressed Prelogar on why the administration believes the plan is fair, asking multiple times and expressing dissatisfaction with Prelogar’s answers in each iteration.
Alito stressed that the administration was not legally required to forgive the debts, so it is legitimate to inquire about the view of how the Education Department evaluated the plan’s fairness.
“All right. I’ll try one more time. Why was it fair to the people who didn’t get arguably comparable relief?” Alito later asked.
Sonia Sotomayor
Sotomayor emphasized the challenges that student borrowers may face without receiving debt relief. (Getty)
“There’s 50 million students who will benefit from this, who today will struggle.”
Sotomayor during a 2017 interview described a “continuing tension” in the U.S. between people who believe everyone must pull themselves up, and those who believe societal inequalities build barriers that must be struck down for some people to “have a chance.”
In a similar vein on Tuesday, she highlighted at length the harms that some student borrowers could face without debt relief.
“Many of them don’t have assets sufficient to bail them out after the pandemic,” Sotomayor added. “They don’t have friends or families or others who can help them make these payments. The evidence is clear that many of them will have to default.”
“Their financial situation will be even worse because once you default, the hardship on you is exponentially greater,” she continued. “You can’t get credit. You’re going to pay higher prices for things. They are going to continue to suffer from this pandemic in a way that the general population doesn’t.”
Elena Kagan
Kagan used a hypothetical situation involving an earthquake to make a point about the utilization of emergency authority. (Stefani Reynolds)
“Congress doesn’t get much clearer than that. We deal with congressional statutes every day that are really confusing. This one is not.”
Kagan expressed in blunt terms her views on the clarity of the HEROES Act.
She went on to ask Campbell, who represented the states, a hypothetical involving an earthquake, repeatedly stressing the value of emergency authority.
“This isn’t a massive delegation to the Secretary of Education. It’s designed to deal with emergency conditions. You have a lot of power in emergencies. When those people’s homes are destroyed, you have the power to discharge their loans.”
Ketanji Brown Jackson
Supreme Court nominee Ketanji Brown Jackson answers questions during the third day of her Senate Judiciary Committee confirmation hearing on Wednesday, March 23, 2022.
Supreme Court nominee Ketanji Brown Jackson answers questions during the third day of her Senate Judiciary Committee confirmation hearing on Wednesday, March 23, 2022. (Greg Nash)
“I feel like we really do have to be concerned about jumping into the political fray, unless we are prompted to do so by a lawsuit that is brought by someone who has an actual interest.“
After a number of her colleagues raised alarm about executive overreach, Jackson during the final line of questioning in the states’ challenge noted that the judiciary, too, is part of the separation of powers dynamic.
Jackson tied her point to her concerns about giving the challengers standing, suggesting that it would improperly lead the courts to encroach on the political branches of government.
Amy Coney Barrett
Barrett notably broke with her fellow conservative justices in questioning Missouri’s argument. (Bonnie Cash)
“If MOHELA is an arm of the state, why didn’t you just strong-arm MOHELA and say you’ve got to pursue this suit?”
Before the court reaches the merits, they first must establish that a challenger has standing, meaning the legal capacity to sue. Missouri’s standing theory received the most attention.
Barrett’s questioning broke with her conservative colleague’s sympathy towards Missouri’s argument, and it instead more closely mimicked the skepticism of the court’s liberals.
The debate revolves around whether the Higher Education Loan Authority of the State of Missouri (MOHELA) is an arm of Missouri, or if MOHELA’s purported revenue losses from the debt cancellation would cause it to miss out on payments it owes to the state treasury.
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The court’s liberals noted that MOHELA itself had the capacity to sue, but it didn’t.
“Why didn’t the state just make MOHELA come then, if MOHELA is really an arm of the state?” asked Barrett. “And all of this would be a lot easier.”
But even if Barrett and the three liberals reject that the challengers have standing, the five remaining conservatives could still deliver the debt relief plan’s fatal blow.
PERSONAL FINANCE
Biden administration lawyer may have saved student loan forgiveness plan at Supreme Court, experts say
PUBLISHED WED, MAR 1 20232:06 PM Annie Nova@ANNIEREPORTER
The government’s top Supreme Court lawyer may have saved President Joe Biden’s $400 billion student loan forgiveness plan from what experts considered all but certain defeat.
Experts lobbed praise on Solicitor General Elizabeth Prelogar, the lawyer who represented the Biden administration in front of the nine justices Tuesday.
“The Biden administration now seems more likely than not to win the cases,” said higher education expert Mark Kantrowitz.
“Her preparation, poise and power were impressive,” Kantrowitz said.
In contrast, the attorneys for plaintiffs opposed to the program were less than stellar, Kantrowitz said. “It was like the difference between a star quarterback and two tiddlywinks players,” he said.
University of Illinois Chicago law professor Steven Schwinn agreed: “Prelogar knocked it out of the park.”
“I do think she could have influenced or even changed the thinking of two justices, maybe more,” he added.
On Wednesday, Fordham law professor Jed Shugerman tweeted that he remains “struck by SG Elizabeth Prelogar’s brilliant performance.”
“She may have snatched victory from the jaws of defeat,” Shugerman wrote.
The nine justices considered two legal challenges to Biden’s plan to cancel up to $20,000 in student debt for borrowers. Six GOP-led states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — had brought one of the lawsuits, and the other was backed by the Job Creators Network Foundation, a conservative advocacy organization.
Prelogar argued that the president was acting squarely within the law to avoid borrower distress during national emergencies and that plaintiffs had not shown in any way that they’d be harmed by the policy, which is typically a requirement to establish so-called legal standing.
When the Biden administration rolled out its student loan forgiveness plan in August, it cited the Heroes Act of 2003 as its legal justification.
That law, which is a product of the Sept. 11 terrorist attacks, allows the U.S. secretary of education to “waive or modify” student loan programs to ensure borrowers aren’t left worse off because of a national emergency. Opponents of the president’s plan say canceling hundreds of billions in dollars in student debt for tens of millions of Americans goes far beyond the scope of the Heroes Act.
Justice Clarence Thomas, who kicked off the justices’ questioning of the Biden administration, seemed to echo that view.
“We’re talking about half a trillion dollars and 43 million Americans,” Thomas said. “How does that fit under the normal understanding of ‘modifying’”?
Prelogar countered that the heart of the provision’s purpose was to allow the secretary to make sure borrowers don’t suffer financially because of their loans during a crisis and that’s exactly what the Biden administration’s policy does.
A top U.S. Department of Education official recently warned that the public health crisis has caused considerable financial harm to student loan borrowers and that its debt cancellation plan is necessary to stave off a historic rise in delinquencies and defaults.
“It couldn’t have surprised Congress one bit that in response to hardship posed by a national emergency, the secretary might consider similarly providing discharge if that’s what it takes to make sure borrowers don’t default,” Prelogar said.
Justice Elena Kagan agreed.
“This is an emergency provision,” Kagan said at one point, posing a hypothetical that the crisis had been an earthquake rather than a pandemic.
“You don’t think Congress wanted to give ... the secretary power to say, ’Oh, my gosh, people have had their homes wiped out, we’re going to discharge their student loans”?
Former miss Idaho
Biden administration lawyer may have saved student loan forgiveness plan at Supreme Court, experts say
PUBLISHED WED, MAR 1 20232:06 PM Annie Nova@ANNIEREPORTER
- Experts have predicted the Supreme Court would rule against President Joe Biden’s student loan forgiveness plan, but some changed their minds after oral arguments, praising the lawyer who presented the administration’s case.
- Solicitor General Elizabeth Prelogar’s “preparation, poise and power were impressive,” said higher education expert Mark Kantrowitz.
The government’s top Supreme Court lawyer may have saved President Joe Biden’s $400 billion student loan forgiveness plan from what experts considered all but certain defeat.
Experts lobbed praise on Solicitor General Elizabeth Prelogar, the lawyer who represented the Biden administration in front of the nine justices Tuesday.
“The Biden administration now seems more likely than not to win the cases,” said higher education expert Mark Kantrowitz.
“Her preparation, poise and power were impressive,” Kantrowitz said.
In contrast, the attorneys for plaintiffs opposed to the program were less than stellar, Kantrowitz said. “It was like the difference between a star quarterback and two tiddlywinks players,” he said.
University of Illinois Chicago law professor Steven Schwinn agreed: “Prelogar knocked it out of the park.”
“I do think she could have influenced or even changed the thinking of two justices, maybe more,” he added.
On Wednesday, Fordham law professor Jed Shugerman tweeted that he remains “struck by SG Elizabeth Prelogar’s brilliant performance.”
“She may have snatched victory from the jaws of defeat,” Shugerman wrote.
The nine justices considered two legal challenges to Biden’s plan to cancel up to $20,000 in student debt for borrowers. Six GOP-led states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — had brought one of the lawsuits, and the other was backed by the Job Creators Network Foundation, a conservative advocacy organization.
Prelogar argued that the president was acting squarely within the law to avoid borrower distress during national emergencies and that plaintiffs had not shown in any way that they’d be harmed by the policy, which is typically a requirement to establish so-called legal standing.
When the Biden administration rolled out its student loan forgiveness plan in August, it cited the Heroes Act of 2003 as its legal justification.
That law, which is a product of the Sept. 11 terrorist attacks, allows the U.S. secretary of education to “waive or modify” student loan programs to ensure borrowers aren’t left worse off because of a national emergency. Opponents of the president’s plan say canceling hundreds of billions in dollars in student debt for tens of millions of Americans goes far beyond the scope of the Heroes Act.
Justice Clarence Thomas, who kicked off the justices’ questioning of the Biden administration, seemed to echo that view.
“We’re talking about half a trillion dollars and 43 million Americans,” Thomas said. “How does that fit under the normal understanding of ‘modifying’”?
Prelogar countered that the heart of the provision’s purpose was to allow the secretary to make sure borrowers don’t suffer financially because of their loans during a crisis and that’s exactly what the Biden administration’s policy does.
A top U.S. Department of Education official recently warned that the public health crisis has caused considerable financial harm to student loan borrowers and that its debt cancellation plan is necessary to stave off a historic rise in delinquencies and defaults.
“It couldn’t have surprised Congress one bit that in response to hardship posed by a national emergency, the secretary might consider similarly providing discharge if that’s what it takes to make sure borrowers don’t default,” Prelogar said.
Justice Elena Kagan agreed.
“This is an emergency provision,” Kagan said at one point, posing a hypothetical that the crisis had been an earthquake rather than a pandemic.
“You don’t think Congress wanted to give ... the secretary power to say, ’Oh, my gosh, people have had their homes wiped out, we’re going to discharge their student loans”?
Low bar, but, if she gets the job done?Former miss Idaho
Biden v. Nebraska (Student Loan Debt Cancellation)
Oral arguments were held on Tuesday in front of the Supreme Court over whether the six states suing the administration to invalidate the debt cancellation plan (1) have Article III standing and (2) whether the plan exceeds the Secretary's statutory authority or is arbitrary and capricious.
The Article III standing issue seems to come down entirely to whether the State of Missouri has standing to sue on behalf of MOHELA, a state-created student loan servicing corporation that wants nothing to do with the litigation, so much so that they were forced to turn over information to the state attorneys general pursuant to Missouri FOIA requests.
Justice Barrett didn't seem convinced that Missouri has standing. However, given the court's previous rulings on reining in executive authority, it seems like the debt cancellation plan still has a high likelihood of being struck down either 6-3 or 5-4.
Regardless of the outcome, Solicitor General Elizabeth Prelogar did a magnificent job arguing on behalf of the government.
If the plan is invalidated, what does this mean to you if you have student loans?
Other than the possible forgiveness, most of you are probably focused on when student loan payments and interest will resume.
According to the Department of Education, payments and interest are scheduled to resume 60 days after the litigation is resolved. Assuming the Supreme Court releases its opinion in June, that would put the payment and interest restart in August.
The authority for the payment pause is tied to the national emergency declaration, which is ending on May 11th, so it seems possible that August could be the time when payments and interest actually restart.
An alternative theory is that, once defeated, President Biden will attempt to find another solution for implementing debt forgiveness and extend the pause relying on the ongoing effects of Covid-19 (in spite of the end of the national emergency).
To make things more complicated, the Biden administration is planning to revise REPAYE, which could also have a big impact on student loan payments and interest.
Bottom line: Student loan borrowers can continue to benefit from a pause in payments and interest for several months and possibly into 2024.
Oral arguments were held on Tuesday in front of the Supreme Court over whether the six states suing the administration to invalidate the debt cancellation plan (1) have Article III standing and (2) whether the plan exceeds the Secretary's statutory authority or is arbitrary and capricious.
The Article III standing issue seems to come down entirely to whether the State of Missouri has standing to sue on behalf of MOHELA, a state-created student loan servicing corporation that wants nothing to do with the litigation, so much so that they were forced to turn over information to the state attorneys general pursuant to Missouri FOIA requests.
Justice Barrett didn't seem convinced that Missouri has standing. However, given the court's previous rulings on reining in executive authority, it seems like the debt cancellation plan still has a high likelihood of being struck down either 6-3 or 5-4.
Regardless of the outcome, Solicitor General Elizabeth Prelogar did a magnificent job arguing on behalf of the government.
If the plan is invalidated, what does this mean to you if you have student loans?
Other than the possible forgiveness, most of you are probably focused on when student loan payments and interest will resume.
According to the Department of Education, payments and interest are scheduled to resume 60 days after the litigation is resolved. Assuming the Supreme Court releases its opinion in June, that would put the payment and interest restart in August.
The authority for the payment pause is tied to the national emergency declaration, which is ending on May 11th, so it seems possible that August could be the time when payments and interest actually restart.
An alternative theory is that, once defeated, President Biden will attempt to find another solution for implementing debt forgiveness and extend the pause relying on the ongoing effects of Covid-19 (in spite of the end of the national emergency).
To make things more complicated, the Biden administration is planning to revise REPAYE, which could also have a big impact on student loan payments and interest.
Bottom line: Student loan borrowers can continue to benefit from a pause in payments and interest for several months and possibly into 2024.
DC Dude et.al I’m rooting for yall. Good luck.
Regarding Sweet vs Cardona
Here’s a list of the colleges in the Sweet v. Cardona settlement agreement
A judge tentatively approved a plan to deliver automatic debt relief to borrower defense applicants who attended one of 150-plus institutions.www.highereddive.com
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Supreme Court strikes down Biden’s student loan relief plan
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She tried to damage his image and he came back on her. This billionaire with extensive ties to China tried to entrap him into ethical issues. You try to play games, they will come back on you.
I have done alot of writing on this college scam athletes/entertainers have been doing after doing deals with companies that contract manufacture overseas back in the day. They will give out scholarships or build schools strangely which is disgusting since you are impacting young adults.
Don't use colleges to transfer wealth to your children, take out a loan, let that shit default if it does not pan out. Give your kids real estate, stock in a trust, or some other appreciating asset. I shake my head when I see a parent proudly saying I paid or I am paying for their school like some retard.
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THIS!
Luckily hood motherfuckers defaulted or just didn't go to college so we can be sure most of the firework sounds this weekend aint gunshots from unhappy campers.
SIKE! It's still NIGGA TIME!
The Negotiated Rulemaking Process for Title IV Regulations - Frequently Asked Questions
What is negotiated rulemaking?
Typically, the Department of Education (the Department) develops its proposed regulations without public input and then publishes them in the Federal Register for comment by the public. The published document is known as a Notice of Proposed Rulemaking, or NPRM. Under negotiated rulemaking, the Department works to develop an NPRM in collaboration with representatives of the parties who will be affected significantly by the regulations. This is done through a series of meetings during which these representatives, referred to as negotiators, work with the Department to come to consensus on the Department’s proposed regulations. These meetings are facilitated by a neutral third-party.
The Department is specifically required by law to use negotiated rulemaking to develop NPRMs for programs authorized under Title IV of the Higher Education Act of 1965, as amended (Title IV programs) unless the Secretary determines that doing so is impracticable, unnecessary, or contrary to the public interest. The Department generally follows these same procedures when it uses negotiated rulemaking to develop NPRMs for programs other than the Title IV programs.
How are the issues to be negotiated determined?
The issues to be negotiated come from three sources: newly enacted laws, the Department, and the public. Because negotiated rulemaking is required for development of NPRMs for the Title IV programs, newly enacted statutory provisions for which Title IV regulations are needed are automatically included on an agenda for negotiated rulemaking (unless the Secretary determines that negotiated rulemaking is impracticable, unnecessary, or contrary to the public interest; see Q1&A1). Other issues for negotiated rulemaking are identified by the Department when it makes a determination that existing regulations need to be amended.
Once the Department determines that rulemaking is necessary, it publishes a Notice in the Federal Register announcing its intent to conduct negotiated rulemaking and identifying the areas in which it intends to develop or amend regulations. This Notice announces a public meeting (or meetings) to obtain advice and recommendations on the issues to be negotiated from the public. The Department may also solicit written submissions of advice and recommendations.
After consideration of this public input, the Department develops a list of the issues that a negotiating committee (or committees) is likely to address, and publishes the list in another Notice in the Federal Register. When the negotiating committee first meets, members may suggest additional issues that may be added to the agenda, subject to the full committee’s approval.
How are negotiators selected?
Negotiators are nominated by the public, and selected by the Department. In the same Federal Register Notice that announces the Department’s intent to conduct negotiated rulemaking or a subsequent Notice, the Department solicits nominations for negotiators to represent the constituencies who will be significantly affected by the regulations. The Department identifies in the Notice the constituencies it believes will be significantly affected. This may include, but is not limited to, students, legal assistance organizations that represent students, institutions of higher education, state student grant agencies, guaranty agencies, lenders, secondary markets, loan servicers, guaranty agency servicers, collection agencies, state agencies, and accrediting agencies. The Department welcomes nominations for representatives of other constituencies who are thought to be significantly affected. Before nominating an individual to participate as a negotiator, the nominator should confirm that the potential nominee can and will make the necessary time commitment to the process (see Q5&A5).
The Department selects negotiators for a committee from the list of nominees with the goal of providing adequate representation for the affected parties while keeping the size of the committee manageable. By law, a federal agency must limit membership on a negotiated rulemaking committee to 25 members unless the agency head determines that a greater number of members is necessary for the functioning of the committee, or to achieve balanced membership. Typically, the Department convenes committees of 12 to 15 negotiators, as well as an alternate for each negotiator to ease attendance concerns for negotiations consisting of multiple sessions. Each committee includes at least one Department representative.
Once members of a committee have been confirmed, the Department publishes another Notice in the Federal Register announcing the committee and its membership. The committee may also add members at the committee meetings, subject to the full committee’s approval.
Individuals who are not selected as negotiators but who will be affected by the regulations may still participate in the proceedings in several ways, such as having access to the individuals representing their constituency to express their views, and participating in informal working groups on issues between meetings. For more on the public’s role in the negotiated rulemaking process, see Q4&A4. Of course, individuals who are not selected as negotiators--like any other member of the public--can always submit comments in response to the published NPRM.
Is negotiated rulemaking open to the public?
Members of the public may observe meetings of the negotiating committee, but cannot speak unless recognized by the committee. Typically, at the end of each day’s meeting, the committee provides an opportunity for the public to comment. Caucuses (i.e., meetings of smaller groups of negotiators) are open to the public at the discretion of the negotiating committee.
Printed materials used by the negotiators are available to the public on the Department’s negotiated rulemaking Web site. The address for this Web site is announced in the Federal Register Notice announcing the members of the committee.
The committee protocols usually address how the negotiators may interact with the media.
How is the negotiated rulemaking process structured and what is the time commitment for a negotiator?
A negotiating committee usually meets for three sessions at roughly monthly intervals. Each session usually lasts three days. The number of sessions, meetings in a session, length of the session meetings, and the time between sessions may vary depending on the issues being negotiated.
The first order of business for a negotiating committee is to finalize the agenda and protocols, which are agreed upon by consensus of the committee. Once the agenda and protocols are finalized and agreed upon, the committee begins its negotiations of the issues on the agenda.
During the time between sessions, the Department drafts and amends the proposed regulatory language based on committee discussions and on any tentative agreements reached on the issues. The Department provides this draft regulatory language to the negotiators prior to the subsequent session. Subcommittees formed by the negotiators may meet during this time to work on specific issues. The subcommittees bring the results of their discussions to the full committee when it reconvenes. Again, a nominator should confirm that a potential nominee can and will make the necessary time commitment to the process before nominating an individual to participate.
How is consensus defined for purposes of negotiated rulemaking?
Consensus means that there is no dissent by any member of the negotiating committee. Thus, no member can be outvoted. The absence or silence of a member at the time the final consensus vote is taken is equivalent to not dissenting. All agreements reached during the negotiations are assumed to be tentative agreements until members of the committee consider all of the issues included on the agenda, and vote on the entire proposed regulatory language at the end of the final session of the negotiated rulemaking. If final consensus is achieved, committee members may not withdraw their consensus and the Department will use this consensus-based regulatory language in its NPRM. Only under very limited circumstances may the Department depart from this language.
What happens after the negotiations have concluded?
If consensus is achieved, the Department uses that regulatory language in its NPRM. If consensus is not achieved, the Department determines whether to proceed with regulations. If the Department decides to proceed with regulations, it may use regulatory language developed during the negotiations as the basis for its NPRM, or develop new regulatory language for all or a portion of its NPRM.
Once the proposed regulatory language for the NPRM is finalized, the Department drafts the preamble language (the portion of the NPRM that explains the proposed regulatory text). If consensus was reached, the Department usually shares the preamble language with the negotiators who may review it for accuracy. Although the preamble language is not negotiated, the Department may agree during the negotiations to include in the preamble explanations of certain issues. If the committee did not reach consensus, the preamble language is not shared with the negotiators.
When the NPRM is published in the Federal Register, it contains a request for public comments and a deadline for submitting those comments. If consensus was reached, negotiators and those persons and entities whom they represent may not comment negatively on the consensus-based regulatory language. The Department considers the comments received by the close of the comment period in developing final regulations. The final regulations published in the Federal Register contain the regulations with which affected parties must comply and the date by which they must do so. The preamble of the final regulations includes a summary of the comments received, the Department’s response to the comments, and an explanation of any changes made to the regulations that differ from the proposed regulations.
What is negotiated rulemaking?
Typically, the Department of Education (the Department) develops its proposed regulations without public input and then publishes them in the Federal Register for comment by the public. The published document is known as a Notice of Proposed Rulemaking, or NPRM. Under negotiated rulemaking, the Department works to develop an NPRM in collaboration with representatives of the parties who will be affected significantly by the regulations. This is done through a series of meetings during which these representatives, referred to as negotiators, work with the Department to come to consensus on the Department’s proposed regulations. These meetings are facilitated by a neutral third-party.
The Department is specifically required by law to use negotiated rulemaking to develop NPRMs for programs authorized under Title IV of the Higher Education Act of 1965, as amended (Title IV programs) unless the Secretary determines that doing so is impracticable, unnecessary, or contrary to the public interest. The Department generally follows these same procedures when it uses negotiated rulemaking to develop NPRMs for programs other than the Title IV programs.
How are the issues to be negotiated determined?
The issues to be negotiated come from three sources: newly enacted laws, the Department, and the public. Because negotiated rulemaking is required for development of NPRMs for the Title IV programs, newly enacted statutory provisions for which Title IV regulations are needed are automatically included on an agenda for negotiated rulemaking (unless the Secretary determines that negotiated rulemaking is impracticable, unnecessary, or contrary to the public interest; see Q1&A1). Other issues for negotiated rulemaking are identified by the Department when it makes a determination that existing regulations need to be amended.
Once the Department determines that rulemaking is necessary, it publishes a Notice in the Federal Register announcing its intent to conduct negotiated rulemaking and identifying the areas in which it intends to develop or amend regulations. This Notice announces a public meeting (or meetings) to obtain advice and recommendations on the issues to be negotiated from the public. The Department may also solicit written submissions of advice and recommendations.
After consideration of this public input, the Department develops a list of the issues that a negotiating committee (or committees) is likely to address, and publishes the list in another Notice in the Federal Register. When the negotiating committee first meets, members may suggest additional issues that may be added to the agenda, subject to the full committee’s approval.
How are negotiators selected?
Negotiators are nominated by the public, and selected by the Department. In the same Federal Register Notice that announces the Department’s intent to conduct negotiated rulemaking or a subsequent Notice, the Department solicits nominations for negotiators to represent the constituencies who will be significantly affected by the regulations. The Department identifies in the Notice the constituencies it believes will be significantly affected. This may include, but is not limited to, students, legal assistance organizations that represent students, institutions of higher education, state student grant agencies, guaranty agencies, lenders, secondary markets, loan servicers, guaranty agency servicers, collection agencies, state agencies, and accrediting agencies. The Department welcomes nominations for representatives of other constituencies who are thought to be significantly affected. Before nominating an individual to participate as a negotiator, the nominator should confirm that the potential nominee can and will make the necessary time commitment to the process (see Q5&A5).
The Department selects negotiators for a committee from the list of nominees with the goal of providing adequate representation for the affected parties while keeping the size of the committee manageable. By law, a federal agency must limit membership on a negotiated rulemaking committee to 25 members unless the agency head determines that a greater number of members is necessary for the functioning of the committee, or to achieve balanced membership. Typically, the Department convenes committees of 12 to 15 negotiators, as well as an alternate for each negotiator to ease attendance concerns for negotiations consisting of multiple sessions. Each committee includes at least one Department representative.
Once members of a committee have been confirmed, the Department publishes another Notice in the Federal Register announcing the committee and its membership. The committee may also add members at the committee meetings, subject to the full committee’s approval.
Individuals who are not selected as negotiators but who will be affected by the regulations may still participate in the proceedings in several ways, such as having access to the individuals representing their constituency to express their views, and participating in informal working groups on issues between meetings. For more on the public’s role in the negotiated rulemaking process, see Q4&A4. Of course, individuals who are not selected as negotiators--like any other member of the public--can always submit comments in response to the published NPRM.
Is negotiated rulemaking open to the public?
Members of the public may observe meetings of the negotiating committee, but cannot speak unless recognized by the committee. Typically, at the end of each day’s meeting, the committee provides an opportunity for the public to comment. Caucuses (i.e., meetings of smaller groups of negotiators) are open to the public at the discretion of the negotiating committee.
Printed materials used by the negotiators are available to the public on the Department’s negotiated rulemaking Web site. The address for this Web site is announced in the Federal Register Notice announcing the members of the committee.
The committee protocols usually address how the negotiators may interact with the media.
How is the negotiated rulemaking process structured and what is the time commitment for a negotiator?
A negotiating committee usually meets for three sessions at roughly monthly intervals. Each session usually lasts three days. The number of sessions, meetings in a session, length of the session meetings, and the time between sessions may vary depending on the issues being negotiated.
The first order of business for a negotiating committee is to finalize the agenda and protocols, which are agreed upon by consensus of the committee. Once the agenda and protocols are finalized and agreed upon, the committee begins its negotiations of the issues on the agenda.
During the time between sessions, the Department drafts and amends the proposed regulatory language based on committee discussions and on any tentative agreements reached on the issues. The Department provides this draft regulatory language to the negotiators prior to the subsequent session. Subcommittees formed by the negotiators may meet during this time to work on specific issues. The subcommittees bring the results of their discussions to the full committee when it reconvenes. Again, a nominator should confirm that a potential nominee can and will make the necessary time commitment to the process before nominating an individual to participate.
How is consensus defined for purposes of negotiated rulemaking?
Consensus means that there is no dissent by any member of the negotiating committee. Thus, no member can be outvoted. The absence or silence of a member at the time the final consensus vote is taken is equivalent to not dissenting. All agreements reached during the negotiations are assumed to be tentative agreements until members of the committee consider all of the issues included on the agenda, and vote on the entire proposed regulatory language at the end of the final session of the negotiated rulemaking. If final consensus is achieved, committee members may not withdraw their consensus and the Department will use this consensus-based regulatory language in its NPRM. Only under very limited circumstances may the Department depart from this language.
What happens after the negotiations have concluded?
If consensus is achieved, the Department uses that regulatory language in its NPRM. If consensus is not achieved, the Department determines whether to proceed with regulations. If the Department decides to proceed with regulations, it may use regulatory language developed during the negotiations as the basis for its NPRM, or develop new regulatory language for all or a portion of its NPRM.
Once the proposed regulatory language for the NPRM is finalized, the Department drafts the preamble language (the portion of the NPRM that explains the proposed regulatory text). If consensus was reached, the Department usually shares the preamble language with the negotiators who may review it for accuracy. Although the preamble language is not negotiated, the Department may agree during the negotiations to include in the preamble explanations of certain issues. If the committee did not reach consensus, the preamble language is not shared with the negotiators.
When the NPRM is published in the Federal Register, it contains a request for public comments and a deadline for submitting those comments. If consensus was reached, negotiators and those persons and entities whom they represent may not comment negatively on the consensus-based regulatory language. The Department considers the comments received by the close of the comment period in developing final regulations. The final regulations published in the Federal Register contain the regulations with which affected parties must comply and the date by which they must do so. The preamble of the final regulations includes a summary of the comments received, the Department’s response to the comments, and an explanation of any changes made to the regulations that differ from the proposed regulations.
I can't believe we're going with Project Veritas.
Anyway, since I didn't have enough employer credits to complete PLSF under IDR plan I have 4 more years till mine are off the books. Even if I have the dough, I'm not gonna pay the entire principle. Paid enough interest. fuck'em
Anyway, since I didn't have enough employer credits to complete PLSF under IDR plan I have 4 more years till mine are off the books. Even if I have the dough, I'm not gonna pay the entire principle. Paid enough interest. fuck'em
They not credible? I have never heard of these folks
I think you'll remember the founders(just recently kicked out) antics
The Obama Acorn bs and other half-assed gotchas on camera
FACT SHEET: President Biden Announces New Actions to Provide Debt Relief and Support for Student Loan Borrowers
June 30, 2023No President has fought harder for student debt relief than President Biden, and he’s not done yet. President Biden and Vice President Harris will not let Republican elected officials succeed in denying hardworking Americans the relief they need.
In light of the Supreme Court’s ruling this morning, President Biden and his Administration have already taken two steps this afternoon aimed at providing debt relief for as many borrowers as possible, as fast as possible, and supporting student loan borrowers:
- The Secretary of Education initiated a rulemaking process aimed at opening an alternative path to debt relief for as many working and middle-class borrowers as possible, using the Secretary’s authority under the Higher Education Act.
- The Department of Education (Department) finalized the most affordable repayment plan ever created, ensuring that borrowers will be able to take advantage of this plan this summer—before loan payments are due. Many borrowers will not have to make monthly payments under this plan. Those that do will save more than $1,000 a year.
These actions reflect the President’s belief that an education beyond high school should be a ticket to the middle class. It also builds on the unprecedented steps President Biden and his Administration have taken to make college more affordable for working and middle-class families and make federal student loans more manageable. The Biden-Harris Administration has:
- Secured the largest increases to Pell Grants in a decade.
- Fixed broken student loan programs such as Public Service Loan Forgiveness, so borrowers actually get the relief they deserve.
- Approved more than $66 billion in loan cancellation for 2.2 million borrowers across the country, including public service workers and those who have been defrauded by their colleges.
The President remains committed to providing relief to low- and middle-income borrowers. For too many Americans, a ticket to the middle-class remains out of reach because of unmanageable student loan debt. COVID-19 exacerbated that challenge – risking tens of millions of borrowers’ financial security and futures because of the economic harms brought on by a once-in-a-century pandemic.
Today, the Department initiated rulemaking aimed at opening an alternative path to debt relief for as many borrowers as possible, using the Secretary of Education’s authority under the Higher Education Act. The Department issued a notice, which is the first step in the process of issuing new regulations under this so-called “negotiated rulemaking” process. The notice announces a virtual public hearing on July 18th and solicits written comments from stakeholders on topics to consider.
Following the public hearing, the Department will finalize the issues to be addressed through rulemaking and begin the negotiated rulemaking sessions this fall. The Department will complete this rulemaking as quickly as possible.
Lowering Monthly Payments
The Biden-Harris Administration today also finalized the most affordable repayment plan ever created, called the Saving on a Valuable Education (SAVE) plan. This income-driven repayment plan will cut borrowers’ monthly payments in half, allow many borrowers to make $0 monthly payments, save all other borrowers at least $1,000 per year, and ensure borrowers don’t see their balances grow from unpaid interest.
Specifically, the plan will:
- For undergraduate loans, cut in half the amount that borrowers have to pay each month from 10% to 5% of discretionary income.
- Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment under this plan.
- Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with original loan balances of $12,000 or less. The Department estimates that this reform will allow nearly all community college borrowers to be debt-free within 10 years.
- Not charge borrowers with unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.
Ensuring Support for Borrowers Most at Risk
To protect the most vulnerable borrowers, the Department is creating a temporary “on-ramp” to protect borrowers from the harshest consequences of late, missed, or partial payments for up to 12 months. While payments will be due and interest will accrue during this period, interest will not capitalize at the end of the on-ramp period. Additionally, borrowers will not be reported to credit bureaus, be considered in default, or referred to collection agencies for late, missed, or partial payments during the on-ramp period. Future monthly bills for borrowers not enrolled in an income-driven repayment plan will be automatically adjusted to reflect the accrued interest during those months.
Borrowers who can pay should do so, but this on-ramp period gives borrowers who cannot make payments right away the necessary time to adjust, enabling them to ultimately make their monthly payments and meet their financial obligations on their loans. Borrowers do not need to take any action to qualify for this on-ramp.
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