College graduate video calls family to celebrate
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Earlier in August, the US Department of Education under President Joe Biden announced that it would write off an additional $ 1.1 billion in student loan debt for approximately 115,000 borrowers attending the ITT Technical Institute, a school that has now disappeared.
This final round of forgiveness brings the administration total to about $ 9.5 billion wiped out for about 563,000 borrowers, according to the Department of Education.
While this is a victory for many, it’s not a sign that large-scale student debt cancellation will necessarily come anytime soon, experts say.
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This is because the debt canceled so far has been carried out through a program called “borrower defense against repayment”. This targeted aid was created to protect people from scams by schools engaging in wrongdoing or breaking certain laws, such as falsely claiming guaranteed employment or falsely telling students that credits would be transferred to d ‘other colleges.
It is separate from the Biden administration’s efforts to determine whether the president can legally write off federal student loan debt by executive order.
“These are apples and oranges,” said Betsy Mayotte, president and founder of The Institute of Student Loan Advisors, a nonprofit organization.
Play catch up
Yet headlines about canceled student loan debts have surfaced in recent months, adding to the confusion and excitement of borrowers. There has been a slight increase in canceled loans by borrower defense lately because the Biden administration is making up for lost time, according to Mayotte.
The updated program rules were supposed to come into effect under former President Donald Trump, but have been delayed. Then, the former administration issued its own regulations in July 2020, months before Trump stepped down.
“They made it almost impossible for anyone to get help and put all pending requests on hold or blocked,” Mayotte said.
That changed when Biden took office in 2021. He relaunched the program and quickly extended aid to thousands of borrowers.
“There is some catching up going on on this front, and it is likely to continue,” said David Bergeron, a higher education expert who has served as acting deputy secretary for post-secondary education and deputy deputy secretary for policy, planning and innovation. in the United States Department of Education during the Obama administration.
What’s next for a general student loan forgiveness
Of course, the Biden administration is still working on a larger forgiveness of student loan debt that would help millions of people struggling with repayment.
The president is currently awaiting reports from the Department of Education and the US Department of Justice which will outline their thoughts on the legality of student loan debt cancellation through executive action.
“The government is working throughout the process to get it done the right way,” said Will Sealy, co-founder and CEO of Summer, a company that helps borrowers simplify and save on student debt.
If Biden cancels some of the student loan debt through executive action, it is likely to be challenged in court and could lead to more problems for borrowers if not confirmed. , according to Mayotte.
“I understand why he doesn’t go ahead with an executive order until he’s sure if he was challenged he would win,” she said of Biden’s reluctance to to cancel the debt on its own.
Even though some lawmakers, such as Senate Majority Leader Chuck Schumer, DN.Y., and Senator Elizabeth Warren, D-Mass., Have asserted that the president can legally write off student loan debt by executive order, all experts are not so sure and want to minimize the potential damage to borrowers.
“The biggest risk for borrowers is that they are thrown into this legal black hole,” Bergeron said.