Do We Live in the Victim’s Own Country? The Biden Administration’s Debt Relief Forgiven Student Loans Are Christmas, Thanksgiving and Fourth of July

Senior administration officials announced Wednesday that the Biden administration is increasing its efforts to fight student loan borrowers who are being taken advantage of.

The Federal Trade Commission and the Consumer Financial Protection Bureau will work with the Department of Education to hold scam artists accountable. It will be possible for state attorneys general to act faster to stop scam in their own jurisdiction if the administration shares scam complaints with them more frequently.

The Biden administration’s application for student loan forgiveness was made public last week. There were many joyful posts regarding debt relief as well as the surprisingly easy process.

The online application won’t be long. Borrowers won’t need to upload any supporting documents or use their Federal Student Aid ID to submit the application.

Among the don’ts, the senior official said: “Don’t pay anyone who contacts you with promises of debt relief forgiveness. You don’t need to pay anyone to get debt relief, and don’t reveal your account information to anyone. The Department of Education and your federal student loan servicer will never call or email you asking for this information”; and, “Don’t ever give personal or financial information to an unfamiliar caller. It’s a good idea to call your student loan servicer directly when you are in doubt.

The administration urged borrowers to sign up to be notified when the application is available, to make sure their loan servicers have their current contact information and to report any scams they encounter to the FTC.

“Due to a vendor error, you recently received an email with a subject line indicating your application for the one-time Student Loan Debt Relief Plan had been approved. The subject line was inaccurate,” reads an email sent Tuesday and obtained by CNN.

“This Biden forgiveness thing is Christmas, Thanksgiving and the Fourth of July all rolled into one for the scammers,” says Betsy Mayotte, the president of the Institute of Student Loan Advisors, a nonprofit that offers free counseling to borrowers.

Mayotte said the release is a great step. There are only two things that we as a community can do to prevent fraud. One is to educate borrowers and the other is enforcement.”

There are evil people who will be trying to use a program like this, that is trying to help people and run their own frauds, and so it’s an all-government approach.

“What we’re trying to do here is to get as much relief as possible to the hard working former students who deserve this relief,” Cordray added. We’re moving fast to get the application and the process done here.

Student loan forgiveness was ripe for fraud before the Biden administration’s plan to get rid of debt. According to a July report from the Tech Transparency Project, more than 10% of Google ads that popped up in searches related to student loan forgiveness were fraudulent. Over the course of the last year and a half, the FTC has reached more than $30 million in settlements for borrowers who were promised relief on their student loans.

The more specific the information on the forgiveness application is, the less likely it will be to be a scam.

State Determination of Borrowers’ Student Loans in the Presence of a “Delta Toy Bank” and “Underwriting a Public Service Loan Program”

Senior administration officials briefed on the application Wednesday, but they refused to give more information about when the application will go live or what process will look like.

It will help, in one way. “But if I know the scammers, they’ll use that as an opportunity too: ‘The application’s out. You have to act fast. Time is short. We can help you make sure you don’t miss it now that the applications are out. It’s a catch-22.

In addition to federal Direct Loans used to pay for an undergraduate degree, federal PLUS loans borrowed by graduate students and parents may also be eligible if the borrower meets the income requirements.

Borrowers should not expect to see debt relief unless the US Supreme Court allows the program to move forward. In February, the justices will hear oral arguments, and then make a decision by June.

The Department of Education already knows what a person’s income is so it’s likely that about 8 million people will get student loan forgiveness automatically.

The program will now exclude borrowers whose federal student loans are guaranteed by the government but held by private lenders. The change could affect about half a million people.

The Department of Education initially said these loans, many of which were made under the former Federal Family Education Loan program and Federal Perkins Loan program, would be eligible for the one-time forgiveness action as long as the borrower consolidated his or her debt into the federal Direct Loan program.

Six Republican-led states are opposing the cancellation of student loan debt in a case that is going to be heard by the Supreme Court.

There are a handful of states that may tax the debt discharged under Biden’s plan if state legislative or administrative changes are not made beforehand, according to the Tax Foundation.

The policy could reduce Arizona’s tax revenue due to the fact that the state code doesn’t consider the loan forgiveness as taxable income. The forgiveness policy is being accused of hurting the attorney general office’s ability to recruit. Some potential job candidates might not see the Public Service Loan Forgiveness program as a benefit if the student loan debt is already canceled, according to the lawsuit.

One of the people in the case was not eligible for forgiveness of student loans because her loans were not held by the federal government, while the other one was only eligible for debt relief because he didn’t receive a grant.

A Circuit Court of Appeals for the Biden Administration’s Cost Estimate in the Energy Backreaction against the COVID-19 Program

The Biden administration argues that the CBO’s cost estimate should be viewed over a 30-year time period and came out with its own analysis two days later. It said the program will cost an average of $30 billion per year over the next decade and $379 billion over the course of the program.

The Biden administration is facing several other legal challenges to the program. Supreme Court Justice Amy Coney Barrett has denied two separate requests to challenge the program.

The appeal at issue was considered an uphill battle because lower courts had ruled that the group, the Brown County Taxpayers Association, did not have the legal right or “standing” to bring the challenge. Taxpayers have no general right to file lawsuits against the government for using taxpayer funds in a certain way.

Barrett acted alone because she has jurisdiction over the lower court that ruled on the case. She didn’t choose to refer the matter to the full court. Her denial appeared as a single sentence on the court’s docket.

The appeals court is yet to rule on that lawsuit. A lower court judge dismissed the lawsuit on October 20, ruling that the states did not have the legal standing to bring the challenge.

The states are expected to immediately appeal. That would send the case to the 8th Circuit Court of Appeals, where it is likely to face a panel of conservative judges.

The Biden administration is being sued by the Arizona Attorney General and other conservative groups.

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Justice Amy ConeyBarrett is assigned to the Seventh Circuit Court of Appeals. Presumably the court’s other justices agreed with her decision.

A federal court in Missouri tossed out the challenge brought by six GOP states after the Supreme Court action.

The Brown County Taxpayers Association, a Wisconsin organization made up of around 100 taxpaying individuals and business owners that supports conservative economic policy, brought the emergency request to the Supreme Court.

The Biden administration said the lawsuits were meritless. Its lawyers said that Congress gave the secretary of education “expansive authority to alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies” like the Covid-19 pandemic, according to a memo from the Department of Justice.

The plan has been challenged by several other conservative organizations. Those lawsuits are percolating in various lower courts, though they may face similar difficulty showing a specific harm to stay alive.

Twenty-two million people submitted applications during the first week the website was open, eight million of them over the first weekend, a startling contrast to the six people (not six million, nor 6,000 — just six) who successfully negotiated the Obamacare website on the day of its launch in 2013. We shared our research on how administrative burdens make public services harder to get with the Biden administration, and we spoke with Department of Education officials about how many people would participate in the program. Even so, it was astonishing for us to see just how simple it is to apply for debt relief.

The application shows how it’s possible to prioritize the public when the government is delivering public services. A couple of minutes is all it takes to complete the form. It works on both a computer and a smartphone, and it is available in Spanish and English. It’s three simple pages: a welcome page, a form and a confirmation page on which applicants attest that they are eligible. Beneficiaries do not have to create an account with a password, a seemingly small step that can actually discourage people from starting. Four pieces of information are necessary: name, social Security number, date of birth and phone number. That is it.

Appellate District Court of Appeals in a Tax-Free Student Loan Forgiveness Program, Filed by the Job Creators Network Foundation

The lawsuit was filed by a conservative group, the Job Creators Network Foundation, in October on behalf of two borrowers who did not qualify for debt relief.

The Texas judge found that the law did not give the executive branch clear authority to create the student loan forgiveness program.

“The program is thus an unconstitutional exercise of Congress’s legislative power and must be vacated,” wrote Judge Mark Pittman, who was nominated by then-President Donald Trump.

The Department of Justice appealed the decision of a federal judge in Texas who found Biden’s program illegal. Additionally, in a separate lawsuit, a federal appeals court issued an injunction to Biden’s relief on behalf of six states, which argued financial institutions would be harmed if borrowers didn’t have to pay their outstanding balances.

The Department of Education will hold onto the information of the borrowers who have already given the necessary information to be considered for debt relief so that it can process their relief once we prevail in court.

Since October 21, the 8th US Circuit Court of Appeals has put a hold on the program that would allow the Biden administration to cancel debt.

They argued that they could not voice their disagreement with the program’s rules because the administration did not put it through a formal notice-and-comment rule making process under the Administrative Procedure Act.

“This ruling protects the rule of law which requires all Americans to have their voices heard by their federal government,” said Elaine Parker, president of Job Creators Network Foundation, in a statement Thursday.

Extension of the Biden-Harris Student Loan Forgiveness Program in the Presence of a High-Temperature Student Loan Borrowing

There have been eight extensions since January of this year, one last month being when Biden pushed back the restart date until after the litigation over his student loan forgiveness program is resolved. The administration’s goal is to be able to cancel some student debt before payments restart.

Payments will resume 60 days after the debt cancellation program is implemented, 60 days after the lawsuits are resolved or 60 days after June 30, if litigation fails.

Tuesday’s extension, the White House said, will alleviate uncertainty for borrowers as the administration asks the Supreme Court to review lower-court orders blocking Biden’s student debt relief program.

“I want borrowers to know that the Biden-Harris administration supports them and that they are committed to delivering essential student debt relief to millions of Americans,” Cardona said.

Bicknell paid off her student debt nearly a year before the H1N1 swine flu hit. Despite those payments, her balance is nearly just as much as what she originally borrowed due to interest. She expects to be eligible for debt cancellation from the Public Service Loan Forgiveness program in January 2024 – when the remaining debt, worth more than $100,000, will be wiped away.

The Public Service Loan Forgiveness program eliminates all outstanding student debt for qualified public sector workers if they make at least 120 monthly payments on their loans, which would take at least 10 years.

Instead, Bicknell has used that money to pay for child care and to save for a future home. She and her husband also moved their children to a more family-friendly community where the rent is higher.

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Borrowers must also be enrolled in a federal income-driven repayment plan, which ties monthly payments to a borrower’s income and family size. Generally, the more net income a borrower has, the bigger the monthly loan payment.

Lauren McClain is a political science teacher at a community college, she has been making her payments on her student loans. She has about $151,000 of student debt remaining and expects to be granted forgiveness under the PSLF program in 2024.

The US Supreme Court announced on Monday that it will hold arguments in a second case in February concerning President Biden’s student loan forgiveness program, which is currently on hold.

In another legal challenge, two borrowers who do not qualify for full debt relief say that they were denied an opportunity to comment on the secretary of education’s decision to establish the forgiveness program.

The justices will consider arguments in a dispute brought by a group of states. The court did not say whether it would ultimately consolidate the two cases.

The court did ask for briefs, however, on whether the challengers in the new case had the legal right or “standing” to bring the case. The court asked if the plan wasstatutorily authorized and if it was adopted in a proper manner.

The court’s action Monday does not change the state of play as the program has already been frozen while legal challenges play out. It does, however, add new plaintiffs to the mix.

Biden’s program would offer up to $20,000 of debt relief to millions of qualified borrowers, but it has been met with legal challenges since it was announced.

Elizabeth Prelogar had told the justices to allow the program to go on and to hear oral arguments this term. They only agreed to the last request.

Prelogar argued in court papers that lower courts had entered nationwide orders blocking the Secretary of Education’s plan to use his statutory authority to provide relief to student-loan borrowers.

The debt forgiveness program is blocked by federal courts and no one has received forgiveness thus far. But there are some borrowers who were already deemed eligible for debt relief by the Department of Education.

The latest emails show that some approvals were sent in error. Now, those borrowers will have to wait until the program clears the courts in order to know how much, if any, of their debt will be wiped out.

“Communicating clearly and accurately with borrowers is a top priority,” a spokesperson for the Department of Education says. “We are in close touch with Accenture Federal Services as they take corrective action to ensure all borrowers and those affected have accurate information about debt relief.”

The Department of Education will review more student loan forgiveness applications if and when the government’s case prevails in court, according to the most recent, accurate emails sent to borrowers.

The email, from Federal Student Aid, referred to the one-time relief plan that the Biden administration rolled out in August and – in recent months – put on hold following legal challenges.

Persis Yu, deputy executive director and managing counsel for the Student Borrower Protection Center, says that this email puts many borrowers back “in limbo.”

Carolina Rodriguez says she hears the same sentiment when speaking to her clients at the Education Debt Consumer Assistance Program in New York. She says borrowers are confused and have reached out to confirm there isn’t anything they can do during this waiting period.

With the Supreme Court set to hear the case as early as February and come to a decision sometime this spring, it appears that borrowers will be stuck in limbo for at least a few more months.