Tag Archives: student loans

Biden Administration Introduces New Regulations to Reduce Cost of Federal Student Loan Payments

The Biden Administration’s proposed regulations for a Revised Pay As You Earn (REPAYE) plan would create the most affordable income-driven repayment (IDR) plan that has ever been made available to student loan borrowers, simplify the program, and eliminate common pitfalls that have historically delayed borrowers’ progress toward forgiveness and provide student debt relief to some 40 million borrowers © Karen Rubin/news-photos-features.com

Despite ongoing opposition by Republicans, President Joe Biden continues to introduce programs to relieve the burden of student loans. This is a fact sheet from the Department of Education describing a Revised Pay As You Earn (REPAYE) plan to provide student debt relief for 40 million borrowers:

Today, the U.S. Department of Education (Department) proposed regulations to reduce the cost of federal student loan payments, especially for low and middle-income borrowers. The regulations fulfill the commitment President Biden laid out in August when he announced his Administration’s plan to provide student debt relief for approximately 40 million borrowers and make the student loan system more manageable for student borrowers. The proposed regulations would create the most affordable income-driven repayment (IDR) plan that has ever been made available to student loan borrowers, simplify the program, and eliminate common pitfalls that have historically delayed borrowers’ progress toward forgiveness.  

“Today the Biden-Harris administration is proposing historic changes that would make student loan repayment more affordable and manageable than ever before,” said U.S. Secretary of Education Miguel Cardona. “We cannot return to the same broken system we had before the pandemic, when a million borrowers defaulted on their loans a year and snowballing interest left millions owing more than they initially borrowed. These proposed regulations will cut monthly payments for undergraduate borrowers in half and create faster pathways to forgiveness, so borrowers can better manage repayment, avoid delinquency and default, and focus on building brighter futures for themselves and their families.” 

The proposed regulations would amend the terms of the Revised Pay As You Earn (REPAYE) plan to offer $0 monthly payments for any individual borrower who makes less than roughly $30,600 annually and any borrower in a family of four who makes less than about $62,400. The regulations would also cut in half monthly payments on undergraduate loans for borrowers who do not otherwise have a $0 payment in this plan. The proposed regulations would also ensure that borrowers stop seeing their balances grow due to the accumulation of unpaid interest after making their monthly payments.  

While these regulations would provide critical relief to student borrowers, the Biden-Harris Administration is also committed to ensuring postsecondary institutions and programs are held accountable if they leave borrowers with unaffordable debts. The Department is currently working on a proposed gainful employment regulation that would cut off federal financial aid to career training programs that fail to provide sufficient financial value and require warnings for borrowers who attend any program that leaves graduates with excessive debts. The same regulatory package will also include proposals to strengthen the conditions that can be placed on institutions that fail to meet the requirements of the Higher Education Act or exhibit signs of risk.  

The Department is also taking steps today to carry out President Biden’s announcement from August that the Department would publish a list of the programs at all types of colleges and universities that provide the least financial value to students. To advance this effort, the Department is publishing a request for information to seek formal public feedback on the best way to identify the programs that provide the least financial value for students. This public comment process will ensure the Department is carefully considering a range of perspectives and considerations as it constructs the list. Once the list is published, institutions with programs on this list will be asked to submit improvement plans to the Department to improve their financial value.  

Estimated effects of the proposed IDR Plan 

The proposed regulatory changes would substantially reduce monthly debt burdens and lifetime payments, especially for low and middle-income borrowers, community college students, and borrowers who work in public service. Overall, the Department estimates that the plan would have the following effects compared to the existing REPAYE plan: 

  • Future cohorts of borrowers would see their total payments per dollar borrowed decrease by 40%. Borrowers with the lowest projected lifetime earnings would see payments that are 83% less, while those in the top would only see a 5% reduction. 
  • A typical graduate of a four-year public university would save nearly $2,000 a year relative to the current REPAYE plan. 
  • A first-year teacher with a bachelor’s degree would save more than $17,000 in total payments while pursuing Public Service Loan Forgiveness—a two-thirds reduction in what they would pay in total under REPAYE.  
  • 85% of community college borrowers would be debt-free within 10 years
  • On average, Black, Hispanic, American Indian and Alaska Native borrowers would see their lifetime payments per dollar borrowed cut in half. 

Building on an Unparalleled Record of Debt Relief 

The draft regulations build upon the work the Biden-Harris Administration has already done to improve the student loan program, make colleges more affordable, approve $48 billion in targeted relief to nearly 2 million student loan borrowers, and fight to provide up to $20,000 in one-time debt relief to over 40 million eligible borrowers, including 26 million who have already applied. These regulations also propose to build on the Administration’s commitment to ensuring IDR plans deliver relief to eligible borrowers. This includes ongoing steps to provide accurate counts of progress toward forgiveness for borrowers through a one-time account adjustment

The proposed regulations and request for information will be published in the Federal Register tomorrow. The public may comment on both documents through the Regulations.gov website for 30 days. The Department expects to finalize the rules later this year and aims to start implementing some provisions later this year, subject to any changes made based on public comments. 

View an unofficial copy of proposed IDR regulation here and a fact sheet with further information here. View an unofficial copy of the RFI here, and a fact sheet with further information here.

Fighting for Debt Relief at the Supreme Court

Since President Biden first announced his intention to cancel up to $20,000 in student loan debt for the vast majority of borrowers, opponents of student debt relief have filed legal challenges seeking to halt this effort. In December, the Supreme Court agreed to hear two of these challenges– Nebraska v. Biden (recaptioned Biden v. Nebraska at the Supreme Court), brought by Republican officials in Nebraska, Missouri, Kansas, South Carolina, Arkansas, and Iowa, and Brown v. Biden (recaptioned Biden v. Brown at the Supreme Court), a challenge brought by student loan borrowers in Texas and funded by a right-wing dark-money group. 

Today, an historic coalition of cities, states, experts, and advocates filed more than a dozen amicus curiae briefs with the U.S. Supreme Court in support of the Biden Administration’s student debt relief program. 

This week’s briefs support the Justice Department’s effort to defend this policy before the nation’s highest court. To date, more than 26 million Americans have applied for student debt relief and more than 40 million Americans are expected to benefit when this program is fully implemented.

Leaders and public officials join law scholars, economists, sociologists, higher education and public policy experts from across the political and ideological spectrum in briefing the high court. The briefs represent the breadth of communities that stand to benefit from student debt relief, including working people, borrowers of color, veterans, older people, people of faith, along with cities and states across the country. Together, these briefs showcase the broad support, strong legal foundation, and urgent economic necessity underpinning President Biden’s effort to cancel student debt for 40 million Americans.

Amici Curiae Quote Sheet is available here: https://protectborrowers.org/wp-content/uploads/2023/01/Student-Debt-Relief-Amici-Curiae-Quote-Sheet.pdf

Amici Curiae Summaries and Highlights are available here: https://protectborrowers.org/wp-content/uploads/2023/01/Student-Debt-Relief-Amici-Curiae-Summaries-and-Highlights.pdf

The amicus curiae briefs filed in support of the U.S. Department of Justice in Biden v. Nebraska and Biden v. Brown include:

Biden Reacts to Trump COVID Relief Executive Orders: ‘Unable to deliver for the American people in a time of crisis, Donald Trump offered a series of half-baked measures’

Vice President Joe Biden reacted to Trump’s COVID Relief Executive Orders, saying “Unable to deliver for the American people in a time of crisis, Donald Trump offered a series of half-baked measures.” © Karen Rubin/news-photos-features.com

On Saturday, August 8, Trump signed four Executive Orders intended to substitute for Congressional Republicans compromising with Democrats on a relief package against the health and economic ravages of the coronavirus pandemic. In a vitriolic speech, delivered to a mini-rally assembled from among his Bedminister golf course members, he attacked the Democrats’ plan, threatened a stock market crash should Joe Biden become president, and promised to end the payroll tax (which funds Social Security) should he be elected.

Indeed, Trump delivered this campaign promise: to reduce income taxes and capital gains taxes (in order to goose the stock market), in effect robbing the US Treasury which is already over $25 trillion in debt with trillions added because of the 2017 GOP tax cuts and the trillions spent on COVID relief, much of it going to the wealthiest and best connected. Instead of providing aid to states and localities which have been devastated by depleted revenues and run-up in costs to address COVID-19, he put more of the burden on states to come up with his faux employment benefits (it requires 25% to be paid by states). Instead of funding election protection and the post office, he accused Democrats of stealing the election.

“The massive taxpayer bailout of badly run blue states we talked about — that’s one of the things they’re looking to do.  Measures designed to increase voter fraud,” he told his adoring audience. 

“You know what it’s about?  Fraud.  That’s what they want: fraud.  They want to try and steal this election because, frankly, it’s the only way they can win the election.  

“The bill also requires all states to do universal mail-in balloting — which nobody is — nobody is prepared for — regardless of whether or not they have the infrastructure.  They want to steal an election.  That’s all this is all about: They want to steal the election.”

Trump couldn’t resist attacking proposals for a Green New Deal:  “And they want to do the Green New Deal, which will decimate our country and decimate — it’s ridiculous, too.  It’s childish.  I actually say the Green New Deal is childish.  It’s for children.  It’s not for adults.”

And when asked what happens if the states can’t pony up the 25% to continue the $400 (not $600) unemployment benefits (the 75% that the federal government would spend would be coming from the states’ share of the CARES Act funding), he said,  “Well, if they don’t, they don’t… So I don’t think their people will be too happy.”

As for the reduction in unemployment benefits, Trump said, “this gives them a great incentive to go back to work.”

Questioned about the constitutionality of going around Congress, which has the sole “power of the purse,” Trump said, “This will go very [fast]– if — if we get sued.  Maybe we won’t get sued.  If we get sued, it’s somebody that doesn’t want people to get money.  Okay?  And that’s not going to be a very popular thing. “

Pressed whether a President should go around Congress  “ and decide how money is collected and spent?” Trump retorted, “You ever hear the word ‘obstruction’? “yes,” the reporter replied. “You were investigated for that.” 

Trump then replied, “They’ve obstructed.  Congress has obstructed.  The Democrats have obstructed people from getting desperately needed money.”  

“But this is in the Constitution, Mr. President,” the reporter insisted.
Asked why he keeps taking credit for Veterans Choice, which was passed in 2014 by the Obama Administration, Trump abruptly ended the press conference.

In reaction to Trump’s executive orders, Vice President Joe Biden, presumptive Democratic nominee for President, issued this statement: –Karen Rubin/news-photos-features.com

Unable to deliver for the American people in a time of crisis, Donald Trump offered a series of half-baked measures today. He is putting Social Security at grave risk at a time when seniors are suffering the overwhelming impact of a pandemic he has failed to get under control. And make no mistake: Donald Trump said today that if he is re-elected, he will defund Social Security.

For months, Trump has golfed rather than negotiated, and sown division rather than pull people together to get a package passed. Now, instead of staying in Washington and working with Republicans and Democrats to reach a bipartisan deal, President Trump is at his golf club in New Jersey signing a series of dubious executive orders.

This is no art of the deal. This is not presidential leadership. These orders are not real solutions. They are just another cynical ploy designed to deflect responsibility. Some measures do far more harm than good.

One order is Donald Trump’s first shot in a new, reckless war on Social Security. Trump announced a payroll tax plan with no protections or guarantees — like the ones the Obama-Biden administration enforced a decade ago — that the Social Security Trust Fund will be made whole. And, Trump specifically stated today that if re-elected, he plans to undermine the entire financial footing of Social Security. He is laying out his roadmap to cutting Social Security. Our seniors and millions of Americans with disabilities are under enough stress without Trump putting their hard-earned Social Security benefits in doubt.

Another order brings cuts, chaos, and confusion to our system of unemployment insurance. Trump is unilaterally reducing the amount laid-off workers could receive. And he purports to provide these benefits until the end of the year, but only identifies enough funding to make it a handful of weeks. Even with that limited funding, Trump is basically playing a cruel game of robbing Peter to pay Paul: He is taking billions of dollars of federal natural disaster funding away so it won’t be available to states like Florida. And, he is forcing states to choose between imposing benefit cuts for unemployed workers or slashing funds for public schools, health workers, and first responders. 

A third order, on evictions, is woefully inadequate to deal with the emerging housing crisis. He is leaving our nation’s renters with ever-mounting debt and leaving our small family landlords badly squeezed. Without a comprehensive plan to help our American families make rent, they will leave this crisis months behind on their payments while many landlords teeter on the verge of bankruptcy. 

And a fourth order is a band-aid approach to student debt that leaves out 7 million borrowers who obtained their federal loans from private lenders or their college rather than the Department. The economic strain on these Americans is deep and unrelenting.

There is a solution to all of this pain and suffering. A real leader would go back to Washington, call together the leaders of the House and Senate, and negotiate a deal that delivers real relief to Americans who are struggling in this pandemic. We need a president who understands their struggle and believes in their courage to overcome.