Washington
CNN
—
Over 40 million federal student loan borrowers may be eligible for up to $20,000 in debt forgiveness, but they will likely have to wait a few more months before the Supreme Court decides whether President Joe Biden can implement his proposed bailout program.
The Supreme Court heard oral arguments last week in two cases challenging Biden’s student loan write-off program, but judges are not expected to make their decision until late June or early July.
When the decision is made, it will also determine when the federal student loans were Suspended due to pandemic since March 2020will restart.
Some borrowers have been anxious for years to see if Biden will deliver on his campaign promise to write off federal student loan debt. Last August, the president finally announced the forgiveness plan.
But after 26 million people applied, the program was blocked by the lower courts in November – before any debt could be written off.
“In a way, it seems like we are one step closer now that they have heard the verbal arguments, but until a decision is made, it still seems like we are in limbo,” said Lindsey Clausen, who has about $68,000 in a student account. . loan debt and works as an instructional designer at the university.
Clausen, 33, applied for an exemption from the Biden forgiveness program last fall as soon as the application was open, hoping the forgiveness would help her and her husband save up for a new home and expand their family.
“I felt relieved, and then the carpet was pulled out from under me,” Clausen said.
“Whatever decision SCOTUS (US Supreme Court) makes, at least it will be nice to get an answer,” she added.
The Biden administration estimated that more than 40 million federal student loan borrowers would qualify for some level of debt forgiveness, with approximately 20 million having their debt balance fully written off if forgiveness program allowed to move forward.
But not everyone with a federal student loan will qualify.
Individual borrowers who made less than $125,000 in 2020 or 2021, as well as married couples or heads of households who made less than $250,000 a year in those years, can receive forgiveness of up to $10,000 of their federal student loan debt. Those with higher incomes will be excluded.
If the eligible borrower also received a federal Grant Pella While in college, a person is eligible for debt forgiveness up to $20,000. Pell grants are a key federal relief program that helps students from the lowest income families pay their college tuition, but these borrowers are still more likely to have trouble paying off their student loans.
Writing off student debt will bring financial relief to millions of Americans, potentially helping them buy their first homes, start a business, or save for retirement.
But those who have already paid off their student loans or decided not to borrow money to go to college will get nothing. AND estimated cost $400 billion writing off part of the debt will shift to all taxpayers.
IN hearing last weekSeveral Conservative judges questioned the fairness of this compromise, while Liberal Judge Sonia Sotomayor objected, arguing that many borrowers “have no friends, families, or others who can help them make these payments.”
The equity controversy touches on one of the biggest complaints about the nation’s higher education system: Many people feel they need to go to college and, as a result, borrow money to get ahead.
Angel Henriquez, a 30-year-old meteorologist with about $61,000 in student loan debt, is one such person.
His parents, immigrants from Mexico, could not help him pay for his college education. Henriquez was put on a waiting list at a public school There was a meteorology program, so he went to a more expensive out-of-state school instead. He is now pursuing a master’s degree, which he believes he needs to stand out in a competitive environment.
“When you talk about fairness, it’s a difficult argument,” Enriquez said.
But if you talk to someone who has come out of poverty, or someone who is a person of color, they will benefit the most from the forgiveness program because they are the ones who have to jump through additional financial hoops to get there. everyone else in the country is educated,” he said.
For some students, college degrees do not allow them to move forward in the world they hoped for.
Even though Blake Goddard worked part-time during his college years, he still had to borrow almost $90,000 to earn a bachelor’s degree in network communications management from DeVry University. Eager to get a better paying job in information technology, he then completed his master’s degree by borrowing another $44,000.
Despite these degrees, most of his jobs were temporary contract positions, and many of his peers opted for cheaper IT certifications rather than a four-year degree.
Meanwhile, the Department of Education found that DeVry Universitycommercial college, misled at least 1,800 borrowers with false advertising of employment rates.
While Goddard, aged 45, Considers himself “one of the lucky ones” who claim to $20,000 debt relief, the cancellation would not hit his balance sheet of more than $150,000 much.
His debt, according to Goddard, is “so detrimental” to his American dream, which was to buy a house and start a family.
“I was stupid enough to fall for that trap,” Goddard said of taking out student loans.
“We wish we could make sure that no one in this country falls into the same trap,” he added.
Now he’s dedicated to helping others avoid borrowing so much money for college and volunteering at an organization that helps students make careers in STEM fields.
One criticism of Biden’s one-time forgiveness program is that it will do nothing to reduce the cost of college for prospective students.
Congress should have come up with a stronger solution to the problem of college affordability, but lawmakers have been unable to take any drastic action. Regulations on Make community college free was removed from Biden’s “Build Back Better” program before came to a vote in the House of Representatives in 2021.
The Biden administration is also working on changes to existing federal student loan repayment plans that do not require congressional approval and are designed to make it easier for borrowers to pay for college tuition.
The Department of Education is currently finalizing a new income-focused debt repayment plan to lower monthly payments as well as the total amount that borrowers repay over time. Unlike the one-time student loan cancellation program, the new repayment plan can help both current and future borrowers.
In addition, changes will be made in July to the Public Service Loan Forgiveness Program, which allows certain government and nonprofit employees to seek federal student loan forgiveness after making qualifying payments for 10 years. The changes will make it easier for some borrowers to obtain debt forgiveness.
If the Supreme Court eventually gives the green light to the student loan write-off program, the government may start to write off some debt fairly quickly. The administration has already approved 16 million applications for assistance.
But several conservative judges last week expressed skepticism about whether Biden could go ahead with his student loan write-off program.
Government lawyers remain confident that their plan is legal. They point to a 2003 law passed in the aftermath of the September 11, 2001 terrorist attacks that empowers the Minister of Education to make sure people don’t get worse on their student loans in the event of a national emergency.
“I’m sure we’re on the right side of the law” Biden told CNN a day after the oral argument, when asked if he was confident the administration would win the case. “I’m not sure about the outcome of the decision yet.”
If the Supreme Court strikes down Biden’s student loan write-off program, the administration could make some policy changes and try again, although the process could take months.
The pandemic pause in payments will be in effect either 60 days after the decision of the Supreme Court, or until the end of August, whichever comes first.