Republicans have shown their interest in overhauling loan programs and eliminating the opportunities for debt forgiveness.
President-elect Donald Trump’s victory should bring some clarity to Americans with student loans, but probably not in the way they’d hoped.
The bottom line is that Biden administration efforts to ease debt burdens are likely to be swept away in short order. President Biden managed to forgive an enormous amount of debt for a huge number of borrowers during his term — aboutSAVE By mid-2024, 8 million borrowers had joined the SAVE plan. That’s when seven Republican state attorneys general sued. On Aug. 9 the 8th Circuit Court of Appeals published aAccording to a unanimous three-judge panel, the Education Department did not have the authority to expand the reach and cost of loan forgiveness so dramatically — a 3,000% increase, according to the panel — without explicit instructions from Congress.
These borrowers could switch to other repayment plans where the legal basis for loan forgiveness hasn’t been challenged, although that could raise their costs. As with the litigation over the SAVE plan, the Education Department is expected to stop defending the draft rules under the Trump administration. Nor is it expected to stand behind a second element on the new forgiveness plan that’s still in development: a rule allowing the department to forgive debts when borrowers are inExperts say that borrowers who’ve already had their loans forgiven won’t be affected by the changes bought by the Trump administration.
Abby Shafroth, co-director of advocacy for the National Consumer Law Center, said shifting management of the loan programs to the Treasury Department “would likely risk substantial disruption for borrowers just due to the logistics of making that change.” But any change in their repayment rights or options, she said, would depend on policy changes made through new laws or rules.
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