Give Joe Biden credit for his inventiveness in violating the law regarding student loan debt. Courts at every level have declared his efforts to forgive student loan debt as unconstitutional. And yet, he keeps flogging the issue.
It's like this: Democrats are the party of elitists. College-educated voters under 35 have abandoned the GOP and flocked to the Democratic Party. A lot of those voters carry student debt that they're either behind in paying or are having trouble keeping up with.
The pandemic was the killer. The student loan repayment "pause" lasted three years and when it restarted, about half of the 43 million student loan borrowers were in arrears of one kind or another.
Absolutely no one is surprised at that. Indeed, Biden tried to use the pandemic as a springboard to forgive all student loan debt. It didn't work. With the Supreme Court decision last year striking down Biden's plan to forgive half a trillion dollars in student debt, he was forced to implement his plan in bite-sized chunks rather than forcing the American taxpayer to eat the big enchilada.
With Biden's exit from the White House imminent, the president decided to make one more grandiose gesture to pander to his student loan base. He revealed a set of rules that would grant "hardship" exemptions to 8 million borrowers. He's going to try to do it by changing the definition of "hardship"
"If these rules are finalized as proposed," reads an Oct. 25 press release, "the Secretary of Education could waive up to the entire outstanding balance of a student loan when the Department determines a hardship is likely to impair the borrower's ability to fully repay the loan or render the costs of continued collection of the loan unjustified."
The rules provide two main pathways to receiving student loan forgiveness. The first would not require borrowers to apply for forgiveness, and would instead be based on predictive data analysis. If this analysis predicts that a borrower has an 80 percent chance of defaulting on their loans within two years, the Department of Education could then provide one-time forgiveness of up to their entire loan balance.
According to the proposed rules, this analysis would be structured to prevent borrowers from deliberately going into default to receive forgiveness. The Department of Education "would address the risk of strategic behavior with a two-fold requirement that the borrower must be highly likely to be in default, or experience similarly severe negative and persistent circumstances," read the draft rules, "and that other options for payment relief would not sufficiently address the borrower's persistent hardship, including [income-driven repayment] plans, for those eligible."
Another way the borrowers could see their debts wiped clean is to allow debtors to apply for a "holistic assessment of the borrower's hardship." Yes, it's just as nebulous as it sounds.
The Education Department would look at factors like "unexpected medical bills, high child care costs, significant expenses related to caring for loved ones with chronic illnesses, or devastating economic circumstances from the impacts of a natural disaster." All those things and more would be considered when figuring out whether the borrower is facing a severe enough "hardship" to warrant forgiveness.
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Adam Looney, the Executive Director of the Marriner S. Eccles Institute at the University of Utah and a visiting fellow at Brookings, is dubious about Biden having enough time to implement the new plan. "It seems like it's hard to imagine that there is enough time," says Looney. "And even if it did go into effect…I assume the Trump administration could stop it very quickly."
There will be a 30-day comment period, after which the Education Department hopes to finalize the rule in 2025. Obviously, that will be too late. The incoming Trump administration isn't likely to allow the program to continue. In fact, there's worry among some debt forgiveness advocates that Trump will erase all of Biden's loan forgiveness programs and force people to pay what they owe.
In many ways, the Trump administration could upend Biden’s student loan policies without having to do much. Several key policies are tied up in litigation, and the new administration could simply choose to stop defending them.
“Some of the first victories for the new administration’s education policy may be just them sitting on their hands and waiting for some of these policies that never were legal in the first place to be struck down by the courts,” said Michael Brickman, a fellow at the American Enterprise Institute.
I remarked many times how Biden simply "waved his magic wand" to make student loan debt disappear. Trump is already warming up his wand and practicing his magic spells to make student loan forgiveness evaporate into thin air.
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