Biden administration scales back student debt relief for MILLIONS

The Biden administration cuts student debt relief for MILLIONS of Americans in a stunning reversal after facing early lawsuits and following criticism over the huge cost to taxpayers.

  • The Department of Education announced the change on Thursday.
  • Biden administration announced plans to provide up to $20,000 in aid
  • The change affects FFEL loans, held by private but government-backed banks.
  • Loan programs changed to direct loans in 2010
  • Six Republican-led states sued in federal court seeking to stop loan relief
  • An apparent concern is that lenders can sue and claim damages
  • Has the change affected you? send an email to newsus@dailymail.com

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The Biden administration quietly announced Thursday a change to its student debt forgiveness program that could exclude four million borrowers who have loans owned or backed by private companies.

The U-turn by the federal government comes after early legal challenges to the policy and after criticism of the huge costs to taxpayers. Critics also claimed that the plan is an illegal use of executive power by President Joe Biden.

The Education Department announced that private loans will not qualify for the relief plan, which the Congressional Budget Office said earlier this week could cost $400 billion over a decade.

The reduction of Perkins and the Federal Family Education Loans, which are bank loans backed by federal guarantees, is due to concerns that the companies could challenge the Biden administration in court. political informed.

They used to be a major component of federal student loans, but stopped in 2010 after a major Obama administration reform switched to direct government loans.

However, about four million people still have FFEL loans, according to government data identified in the report. Forty-five million Americans owe student loans.

Initially, the administration had allowed those with FFEL loans to reorganize so that they would be eligible for relief of $10,000 to $20,000 per borrower.

The Biden administration has quietly announced a change to its student debt forgiveness program that could exclude four million borrowers after the first lawsuits were filed against the plan and following criticism about the huge costs to taxpayers.

The Biden administration has quietly announced a change to its student debt forgiveness program that could exclude four million borrowers after the first lawsuits were filed against the plan and following criticism about the huge costs to taxpayers.

But as of Thursday, those who had not made the changes could no longer benefit.

According to the report, the companies that hold the loans are the biggest legal threat to the program.

They face losses as borrowers consolidate their loans and move them into one owned directly by the government.

The initial policy stated that FFEL and Perkins loans qualified.

Guidance from the Department of Education updated Thursday stated: “As of September 29, 2022, borrowers with federal student loans not held by the ED cannot get one-time debt relief through debt consolidation. those loans into Direct Loans.

The department is “assessing” whether “alternative avenues exist to provide relief” to these borrowers and is “discussing this with private lenders,” it said.

A Department of Education spokesperson said: “Our goal is to provide relief to as many eligible borrowers as quickly and easily as possible, and this will enable us to achieve that goal as we continue to explore additional options legally available to provide relief to borrowers. with privately held FFEL loans and Perkins loans, even if FFEL borrowers could receive one-time debt relief without the need to consolidate.’

Experts told NPR that private banks that were subject to loss of business could potentially sue to stop the loan forgiveness program on the grounds that they suffered damages.

The plan allows tens of millions of borrowers to eliminate $10,000 in student loan debt.  Pell Grant recipients can get $20,000 in aid

The plan allows tens of millions of borrowers to eliminate $10,000 in student loan debt.  Pell Grant recipients can get $20,000 in aid

The plan allows tens of millions of borrowers to eliminate $10,000 in student loan debt. Pell Grant recipients can get $20,000 in aid

The first lawsuit against the program, filed this week, was based on a plaintiff who proved harm by residing in one of six states where loan forgiveness is taxed as income, a move that will leave people hooked on a tax bill. even while saving thousands. in debt.

The government has already responded that the program is voluntary and that the plaintiff can forgo the $20,000 in aid.

A second lawsuit, filed Thursday by six GOP-led states, challenges the program by citing President Joe Biden’s comment to ’60 Minutes’ that the pandemic is ‘over’.

The moves in court come as the price of the plan is still in the spotlight, with a new estimate from the Congressional Budget Office this week saying the plan to pay off student loan debt will cost $400 billion. for a decade.

Six GOP-led states SUE Biden to stop massive student loan forgiveness: Lawsuit uses his 60 Minutes claim that ‘the pandemic is over’

Six Republican-led states filed a lawsuit in federal court Thursday seeking to strike down President Biden’s plan to provide people with up to $20,000 in student loan relief, citing the president’s own words calling the pandemic “over.”

States are suing to stop the administration’s plan to forgive the student loan debt of tens of millions of Americans, accusing it of overstepping its executive powers.

It is at least the second legal challenge this week to the sweeping proposal put forward by President Joe Biden in late August, when he said his administration would write off up to $20,000 in educational debt for a large number of borrowers.

Another lawsuit, filed Tuesday, is based on a plaintiff who is eligible for $20,000 relief but does not want to keep the tax liability for paying it. Six states tax loan forgiveness.

The moves in court come as the price of the plan is still in the spotlight, with a new estimate from the Congressional Budget Office this week saying the plan to pay off student loan debt will cost $400 billion. for a decade.

The loan announcement, after months of internal deliberations and pressure from Liberal activists, immediately became political fodder ahead of the November midterm elections and fueled Conservative arguments about legality.

In the lawsuit, which was filed Thursday in federal court in Missouri, the Republican states argue that Biden’s cancellation plan is “not remotely designed to address the effects of the pandemic on federal student loan borrowers,” as it is required by the 2003 federal law that the administration is using as legal justification.

They point out that Biden, in an interview with CBS’s ’60 Minutes’ this month, declared that the covid-19 pandemic was over, but still uses the ongoing health emergency to justify large-scale debt relief.

“It is patently unfair to saddle working Americans with the loan debt of those who chose to go to college,” Arkansas Attorney General Leslie Rutledge, who heads the group, said in an interview.

He added: ‘The Department of Education is required by law to collect the balance due on loans. And President Biden does not have the authority to override that.’

Arkansas Governor Leslie Rutledge and five other GOP-led states are suing

Arkansas Governor Leslie Rutledge and five other GOP-led states are suing

Arkansas Governor Leslie Rutledge and five other GOP-led states are suing

The nonpartisan Congressional Budget Office says Biden's plan will cost the United States $400 billion over the next decade and the latest moratorium will increase borrowing debt by $20 billion.

The nonpartisan Congressional Budget Office says Biden's plan will cost the United States $400 billion over the next decade and the latest moratorium will increase borrowing debt by $20 billion.

The nonpartisan Congressional Budget Office says Biden’s plan will cost the United States $400 billion over the next decade and the latest moratorium will increase borrowing debt by $20 billion.

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