![]() ![]() The update says that only borrowers in the Federal Family Education Loan (FFEL) Program whose loans are held by the federal government are eligible. “Our goal from day one has always been to deliver relief to as many borrowers as possible, as quickly as possible, and this change helps us achieve that,” press secretary Karine Jean-Pierre said on Friday. But the White House says it is simply trying to speed up effective action. The lawsuits this week are largely being attributed by observers to the timing of the update to exclude some borrowers. The Heroes Act allows the Education Department to waive or modify statutes or provisions related to student financial assistance programs during war or national emergencies such as the COVID-19 pandemic. “Looking at this whole situation at a very high level, the administration’s always been on somewhat shaky legal ground,” said Moran, a principal at Bose Public Affairs Group. “From a legal standpoint, observationally, this administration is using the Heroes Act, which has always kind of been controversial but everyone has used it, both Republican and Democratic administrations, for various purposes.” The plaintiff claimed he would be subject to an expensive tax in the event of debt relief because he lives in Indiana, which is one of several states that considers debt cancellation taxable income. The other lawsuit this week came from public interest firm Pacific Legal Foundation, which challenged the plan through a plaintiff who is currently paying off loans. A few initial bumps on the scope and implementation of the plan aren’t enough to walk back the enthusiasm for student loan forgiveness, particularly in the minds of younger voters,” said Debra Dixon, former chief of staff at the Office of Planning, Evaluation and Policy Development at the Education Department under President Obama.īut Dixon warned that “legal limitations could be another story.” ![]() “Failure to address the prominent campaign promise of student debt forgiveness would have been hard to overcome politically. Others argued that issues such as scope and implementation won’t impact the enthusiasm level about the program from voters. So, you have that, and you have the legal challenges and the cost estimates coming out,” said Robert Moran, a former senior policy adviser in the Education Department under President George W. When you look at the national reaction, it wasn’t as well received. “The announcement didn’t get the political praise they thought it would. When the president announced the plan in August, Republicans and even some moderate Democrats quickly criticized it for being too costly for taxpayers. One major legal challenge came from several Republican-led states, arguing that the plan is unlawful because there is no statute from Congress authorizing the cancellation of student loan debt. “There’s so much fear going on, so many borrowers are already calling, rushing to us, ‘What does this mean for me?’ It was very abrupt to have, ‘Today is the day we announce it and the day that is the last day to consolidate within minutes of lawsuits coming out,’” said Natalia Abrams, president of the Student Debt Crisis Center. ![]() The applications for debt relief are expected to open this month under the program, which will forgive up to $10,000 in federal student loan debt for borrowers earning under $125,000 and up to $20,000 for borrowers who received Pell Grants.Īn abrupt update on Thursday, however, said that borrowers with federal student loans not held by the Education Department are no longer eligible to obtain the relief, stirring up confusion. The administration was confronted with the first round of lawsuits against the program, as well as a tough score from the Congressional Budget Office (CBO) that elevated concerns over its cost, both issues that the White House has downplayed in an attempt to keep voters enthusiastic about forgiveness. ![]() President Biden’s student loan forgiveness plan hit multiple road bumps this week, leading to the administration ultimately scaling back eligibility, excluding hundreds of thousands of borrowers from its relief plan. ![]()
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