And that's what's Biden has been trying to address. And that is the problem that we have here right now. So people who have paid back their loans in full still owe as much as they did the day they took out the loan because of the spiraling interest. Well, that is what's happening with student loans, except unlike a house or a car, you don't have any equity. Imagine making payments on your house or your car, and years later you still owe more or as much as you borrowed in the first place. It's a lot of people who are in their forties and fifties who have struggled with student loan debt because of the 1996 law that privatized a lot of this debt. Rebecca: Ed, do you think the Supreme Court will affirm lower court rulings that the executive order was illegal?Įd: You know, this is not my area of expertise when it comes to the law, but I am familiar with the student debt crisis, not through my own being, but through what I've seen other people go through. And I think the court is going to rule very clearly on this. This was a cheap political effort last year in an election year to try and basically bribe young voters by making it seem like they were going to be able to cancel this debt. Former Speaker of the House Nancy Pelosi has said this power cannot be used through an executive order. The secretary of education has said they don't have this power. The power to appropriate money, the power to spend money rests in Congress. College debt for students is a good idea versus whether the United States has the authority in the Constitution to do that. Look, you have to separate whether you're doing something about college. It’s unclear how much the second proposal will cost.Matt: I'd wager a pretty large amount of money that the Supreme Court will find that the present United States cannot use the Heroes Act, which was passed in 2003, to unilaterally wipe out up to $1,000,000,000,000 in student loan debt. That plan was estimated to cost $400 billion. If they don’t, the agency will propose its own plan, which can be finalized after a public comment period.īiden called for a plan to help “as many borrowers as possible,” but his administration seems to be moving away from the type of mass cancellation that he promised in August 2022. If they reach consensus, the department will move forward with it. Meetings began earlier this month and are scheduled to continue into December.Īt the end of the process, negotiators will vote on a proposed rule. It includes students and officials from a range of colleges, along with loan servicers, state officials and advocates including the NAACP. The committee is made up of negotiators who represent a range of viewpoints on student loans. The new draft will be taken up when the committee meets next week. Before the rules can be enacted, they must be weighed by a committee of government outsiders in a process known as negotiated rulemaking. The proposal aims to settle the dispute by creating new federal rules detailing cases that merit cancellation. But the law is unclear on how the secretary can wield that authority, creating a legal gray area that has been the subject of debate since Biden took office. The latest attempt rests on the Higher Education Act of 1965, a wide-reaching law that gives the education secretary power to “compromise, waive or release” certain debts. The public will be able to provide written feedback next year.Įven a more limited plan for relief is sure to draw fierce opposition from Republicans, who see cancellation as an unfair burden on taxpayers. The department will continue to refine the proposal as it goes through a federal rulemaking process, according to the document. It would also help older borrowers who took out loans decades ago and may otherwise never repay their debt. It would offer relief to borrowers who attended for-profit college programs with poor outcomes. It would help counter interest that snowballs beyond borrowers’ original balances. The new proposal aims to tackle issues that are seen as some of the biggest culprits behind skyrocketing debt. But after that was rejected by the court’s conservative majority, he called on the Education Department to try again using a different legal basis. It would have canceled up to $20,000 in federal student loans for those with annual incomes below $125,000 or couples below $250,000. President Joe Biden’s initial plan was broader. Though full details are likely months away, the department says it wants to provide relief to - borrowers whose balances exceed what they originally owed those who have loans that entered repayment 25 or more years ago those who used loans to attend career-training programs that led to “unreasonable” debt loads or insufficient earnings those who are eligible for other loan forgiveness programs but did not apply.
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