The Biden Administration: Implications for Student Loan Repayment Fraud and Debt Removal in the Days before Student Loans Can Be Formed
The Biden administration is taking new steps to help protect borrowers from scams in the days before Americans can begin to apply for student loan forgiveness.
In order to hold scammers accountable, the administration plans to increase collaboration between the Department of Education and other federal agencies, including the Federal Trade Commission and the Consumer Financial Protection Bureau. The administration plans to start giving scam complaints to the states more frequently, so state attorneys general can act faster, and will also start partnering with social mediainfluencers to promote public awareness.
If the person was eligible for a federal grant while they were in college, then they are eligible for debt forgiveness.
When the process does begin, the administration official told reporters, borrowers will be able to apply without uploading any documents or using the application portal.
You could be contacted by a company saying they can help you discharge your debts for a fee. No one will ever have to pay for help with your federal student aid. Make sure you work only with the US Department of Education and our loan servicers, and never reveal your personal information or account password to anyone,” it said.
There will be a campaign on social media and the FTC has a complaint network where consumers can report fraudulent activity.
The administration has not released much information regarding the release of the application or what it will look like. According to NPR, some borrowers have already encountered student loan relief scam and misinformation in texts, phone calls and emails and experts say it’s getting worse.
“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.
The release they did today is very positive, says Mayotte. “There’s only two things we can do as a community [to prevent fraud]. One of them is to educate borrowers while the other is to enforce.
“It’s all-government, because there are evil people who will be trying to use a program like this that is trying to help people, and they will run their own frauds and scam to get money or personal, so this is 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 are moving at a very fast pace to get the application done.
Before the Biden administration’s plans to cancel debt, student loan forgiveness was ripe for fraud. 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. And in the last year and a half, the FTC has reached nearly $30 million in settlements for borrowers who were falsely promised relief on their student loan payments.
One way to avoid scam vulnerability in the first place would be to release more specific information on what the forgiveness application will look like or when to expect it.
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But in a briefing Wednesday, senior administration officials would not provide any more concrete details on when the application will go live or what the process will look like.
“In one way, it will help,” she says. If I know the scam artists, they will use that as an opportunity to take advantage of it. You have to act fast. Time is short. The applications are out now and we want you to stay on top of it. It’s a catch-22.
The program is facing several legal challenges. Supreme Court Justice Amy ConeyBarrett has denied two requests to challenge the program.
This case will continue in the Seventh Circuit, where it is being heard on appeal. A federal district court judge ruled that the taxpayer group did not have standing and dismissed the lawsuit. Taxpayers cannot show a personal injury as is needed to bring a suit. In 2007, the Supreme Court said, “if every federal taxpayer could sue to challenge any Government expenditure, the federal courts would cease to function as courts of law and would be cast in the role of general complaint bureaus.”
Barrett acted alone because she has jurisdiction over the lower court that ruled on the case. She declined to refer the matter to the full court. Her denial appeared as a single sentence on the court’s docket.
A federal district court judge rejected a separate lawsuit brought by six Republican-led states Thursday, also because the plaintiffs did not have the legal standing to bring the challenge.
The states are likely to appeal. The case is likely to go to the 8th Circuit Court of Appeals.
The Biden administration is also facing lawsuits from Arizona Attorney General Mark Brnovich, and conservative groups such as the Job Creators Network Foundation and the Cato Institute.
There were conflicting results on Thursday as a federal judge in Missouri rejected challenges to the student debt relief measure while a different judge in Washington ruled against them.
That’s why, until Thursday, each court to rule on a lawsuit challenging the Biden student loan debt relief program had dismissed the suit for lack of standing, like the St. Louis-based federal district court in a suit brought by six red states. Whether the plaintiffs were taxpayers or states, the problem was the same: Like it or hate it, when the government hands out a benefit to a class of individuals, that doesn’t usually injure other individuals discretely.
There was a bigger issue in the lawsuit that Judge Autrey did not rule on. Instead, he said the states had not suffered injuries of the sort that gave them standing to sue.
Justice Amy Coney Barrett, who is assigned to the Seventh Circuit Court of Appeals, was the one who received the emergency application. Presumably the court’s other justices agreed with her decision.
The closely watched challenge brought by six GOP-led states was tossed out by a federal district court after the Supreme Court action.
An emergency request was brought to the Supreme Court by the Brown County Taxpayers Association, which is made up of around 100 tax paying individuals and business owners that advocate for conservative economic policy.
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The organization says that the U.S. Department of Education has no authority to forgive student loans. The applicants contend that the Department of Education can’t forgive loans directly because it is vested with the power to manage them. This power, they say, rests with Congress.
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 research on how administrative burdens make public services harder to come by, as professors of public policy, and we spoke with Department of Education officials about how many people would be able to participate in the program. Even so, it was astonishing for us to see just how simple it is to apply for debt relief.
The streamlined application shows what can be achieved when the government puts priority on service delivery for the public. The form can be completed in just a couple of minutes. It is available in both Spanish and English and works on a computer and a phone. It is composed of three pages, a welcome page, a form and a confirmation page. Beneficiaries do not have to create an account with a password, a seemingly small step that can actually discourage people from starting. They need five information: name, social security number, date of birth, phone number and email address. That’s it.
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Two borrowers who didn’t qualify for debt relief, were the focus of a lawsuit filed in October by a conservative group.
But the Texas federal judge found that the law does not provide the executive branch clear congressional authorization to create the student loan forgiveness program.
But for Pittman, the central problem with the program is that its sheer economic size required clearer authorization from Congress than that provided by the 2003 statute on which the executive branch is relying. Invoking the Supreme Court’s new and deeply contested “major questions doctrine,” Pittman’s ruling would, if left intact, make it impossible for the program to be rescued without Congress stepping in.
The Justice Department and the White House disagreed with the court’s ruling regarding the student debt relief program.
The 26 million borrowers who have already given the Department of Education necessary information to be considered for debt relief will have their information held onto by the Department so that it can process their relief once we prevail in court, said Jean-Pierre.
One of the people in the case had student loans that were not held by the federal government and they were not eligible for student loan forgiveness, but the other had a grant that he did not apply to.
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.
Steve is a CNN legal analyst and a professor at the University of Texas School of Law. He is the author of the upcoming book “The Shadow Docket: How the Supreme Court Uses Stealth Rulings to Amass Power and Undermine the Republic.” The opinions expressed in this commentary are his own. CNN has more opinion.
Against that backdrop, Judge Pittman’s holding that the two plaintiffs in his case had standing just doesn’t hold up. For both of them, the fact that they are partially or completely ineligible for the program was tied to their standing. The injury they suffered, in Pittman’s view, is that they were unable to argue for more expansive eligibility criteria that would’ve included them – not that the program itself is unlawful. That reasoning is ironic for two reasons.
A case has to have at least three elements in order for it to have standing: that there is an injury in fact, that it is fairly linked to the defendant and that the courts are able to provide at least some compensation for injuries.
It is a technical doctrine but also an important one. The principle of no principle is more fundamental to the judiciary’s proper role in our system of government, as stated in Justice Samuel Alito’s opinion.
The federal courts do not have the job of resolving policy disputes or answering hypothetical questions. If a party can show how they have been harmed by the challenged policy, then they will usually be allowed to challenge it.
If the complaint is just that the government is acting unlawfully in a way that doesn’t affect plaintiffs personally, that’s a matter to be resolved through the political process – not a judicial one. As Justice Antonin Scalia put it 30 years ago, “vindicating the public interest (including the public interest in Government observance of the Constitution and laws) is the function of Congress and the Chief Executive.”
The public discourse surrounding the student loan debt relief program is also helpful in reminding people that not every policy dispute should lead to litigation.
If Justice Alito was correct in his opinion, courts should only decide cases that present actual, justiciable controversies if they want to be involved in the proper functioning of the government. Otherwise, the courts aren’t acting as courts; they’re just taking sides in policy debates that no one elected them to resolve.
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.
The challenge has been brought by two individual borrowers – Myra Brown and Alexander Taylor – who are not qualified for full debt relief forgiveness and who say they were denied an opportunity to comment on the Education Secretary’s decision to provide targeted student loan debt relief to some.
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The justices will hear arguments in a case brought by a group of states. The court did not say whether it would ultimately consolidate the two cases.
The court’s action Monday does not change the state of play as the program has already been frozen while legal challenges play out. Adding new people to the mix is what it does.
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.
In the case at hand, Solicitor General Elizabeth Prelogar had urged the justices to lift a block on the program and hear oral arguments this term. They consented only to the last request.
Prelogar argued in court papers that the Secretary of Education had the power to give relief to student-loan borrowers who were adversely affected by the Covid-19 epidemic.
Congress should require colleges to give students an accurate price for the cost of attendance, the Government Accountability Office said in a recent report that found that most colleges fail to provide all the financial information students need.
Prospective college students usually receive a financial aid letter from schools once they are accepted. The grant awards and federal loans for which the student is eligible are listed in the letter.
Colleges should estimate the net price, which is the amount a student pays to attend a particular school, by only taking grants and scholarships from their other costs. The net price is not included in almost all of the colleges letters.
The legislation introduced last week would establish certain requirements for college financial aid offers.
The bill is intended to provide better information about the cost of college for students and their families. bipartisan support for the Understanding the True Cost of College act didn’t help it pass Congress.
Foxx, GOP leader of the House Education and Labor Committee, has been critical of Biden’s proposed student loan forgiveness program – which, she argues will do nothing to address college costs while shifting the $400 billion cost of debt relief to taxpayers. The Supreme Court is expected to rule by June on whether the program is legal.
The initiative Biden proposed to make community college free failed to pass Congress last year, because he couldn’t do it on his own. But lawmakers did approve a $400 increase to the maximum federal Pell grant for low-income students, raising it to $6,895 a year.
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In addition, last month, the Department of Justice released new guidance that aims to make it easier to have federal student loan debt discharged in bankruptcy – a particularly difficult legal process under the previous policy.
The borrowers who received incorrect email notifications have begun to get new emails from the government. Applications have yet to be approved or rejected after they were received.
According to a statement by the Department of Education, communicating clearly and accurately with borrowers is a top priority.
If the Supreme Court doesn’t allow the program to move forward, borrowers won’t see debt relief. The justices are scheduled to hear oral arguments in February, with a decision expected by June.
The Department of Education will look at more student loan forgiveness applications if the government wins in court, according to accurate emails sent to borrowers.
The fate of President Joe Biden’s student loan forgiveness program that would impact scores of borrowers from a wide array of colleges and socio-political background is in the hands of nine people who graduated from elite private schools.
Some justices have been paid big bucks through lucrative book deals and teaching jobs, which provides limited information about their finances, those of their spouses and reimbursements for travel. In recent years, the three of them have all received over six figures in book royalties or publishing deals.
A few justices like Roberts and Jackson attended Harvard Law School. Justices Sonia Sotomayor, Clarence Thomas, Samuel Alito and Brett Kavanaugh went to Yale Law School. The only current justice who is not part of the Ivy club is Amy Coney Barrett, who received her law degree from Notre Dame.
Some of the justices had financial assistance to help them attend school: Holy Cross College gave a scholarship to Thomas for his undergraduate degree, while at Ivy League schools, he attended Princeton University and the Yale Law School. They have different politics and a lot of different background. Thomas grew up in poverty in Georgia, but is the court’s leading conservative justice.
And to be sure, students who took out federal loans for undergraduate programs at private schools could be eligible for the relief. In fact, those students took out more debt than their public school counterparts in recent years and at slightly higher rates, according to data from the College Board.
“I think it’s fair to say that (the justices) didn’t live the experiences of the people that benefit from the president’s debt relief program. And it’s important for them to go into this case understanding the limits of their own life experience and how that might affect their ability to be impartial considering case,” said Mike Pierce, executive director of the Student Borrower Protection Center, which urged the justices to uphold the relief program in a friend-of-the-court brief.
Pierce said he’ll be looking to both Sotomayor and Jackson to pose “questions trying to tee up the experiences of the people that will benefit to help give the solicitor general the opportunity to really lay out the government’s economic rationale – the emergency that it sees and the reason that it took this big action.”