(LibertySociety.com) – The Biden administration is not stopping in its pursuit of student loan debt forgiveness after being struck down by the Supreme Court earlier this year. Previously, Biden attempted to use The HEROES Act to forgive the debts, but the Supreme Court said that it did not authorize the Secretary of the Department of Education (DOE) to issue loan forgiveness to borrowers. Now, Biden and DOE Secretary Miguel Cardona are drafting a rule under the Higher Education Act that could give relief to a different group of borrowers. The rule is expected to be finalized in 2024 when the next election cycle is in full swing.
Student loan debt in the United States is around $1.6 trillion split among 40 million borrowers. Nearly half of a million disabled people have received debt forgiveness, as well as others who were victims of fraud by shady schools or awaiting a court settlement. Over 715,000 public servants have received a total of $51 billion in forgiveness, and $42 billion was slashed for income-driven repayment program inaccuracies. The new rule will offer $127 billion in forgiveness to borrowers who owe more money than they initially borrowed or those who have been repaying their loans for 25 years or longer. Borrowers who attended training schools that charged excessive tuition in comparison to actual salaries will also be eligible for forgiveness. Finally, individuals who have not applied for debt forgiveness but are eligible will also be considered.
Student loan repayments finally resumed in October following a three-year pause, but some loan servicers have fumbled the restart. Missouri Higher Education Loan Authority (MOHELA) is losing out on $7.2 million from the Biden administration for sending out late statements and causing borrowers to miss their first payment. Cardona said that the Biden administration would not “allow borrowers to suffer the consequences of gross servicing failures.” A public comment period will be available before the rule is finalized next year.
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