Donald Trump spoke on the campaign trail about his disdain for Joe Biden's efforts to forgive $1.3 trillion in student loan debt. He called Biden's plans "vile" and "illegal."
The Supreme Court and every other appellate court where Biden has taken his programs to forgive student loan debt agree with Trump. But Biden's efforts to forgive student loan debt in a piecemeal fashion have made a total mess of the student debt program and created a confusing landscape for the incoming administration to navigate if it wants to repeal or end Biden's debt relief programs.
“It’s going to be insanely complicated,” said Michael Brickman, who was an official in the Education Department during Trump's first term. “You really can’t overstate the mess that this new administration is inheriting.”
Brickman, a fellow at the American Enterprise Institute (AEI) said the Biden administration’s “misadventures around loan forgiveness” that failed in the courts have fashioned “a really chaotic situation that’s going to have to be fixed.”
Many of Biden's recent policy changes that are already tied up in court thanks to GOP attorneys general in several states will be easy to dump. All Trump has to do is stop defending them.
But some policies that have been in place for years will be more difficult to undo. The "Saving on a Valuable Education" (SAVE) plan will be especially difficult to destroy.
The plan, which the president finalized last year, caps monthly payments at 5 percent of income for undergraduate borrowers, offers more generous interest subsidies and allows loan forgiveness in as few as 10 years of repayment for some borrowers. Republicans have criticized it as an overly expensive program that operates essentially as a back-door route to mass loan forgiveness.
Roughly 8 million borrowers were enrolled when judges froze the plan earlier this fall. As a result of the court orders, the Education Department has suspended monthly payments for those taking advantage of the program. But reverting those borrowers back to earlier, less generous repayment plans presents both legal and operational hurdles.
Trump transition advisers have been looking at ways to rescind the SAVE plan while also figuring out how to replace it with other repayment options for borrowers, according to the same people familiar with the discussions.
“The American people re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail,” said Trump spokesperson Karoline Leavitt, in a statement. “He will deliver.”
Scott Buchanan, who heads a trade group for loan servicers, the Student Loan Servicing Alliance, says the effort to recalculate what borrowers in the SAVE program must pay will take months.
“It certainly wouldn’t be an overnight sort of reversal,” Buchanan said. “It’s not a simple fix if that’s where the next administration goes.”
Another question facing the incoming administration is what to do about the six million borrowers who are already in default. The Biden administration delayed enforcement actions like garnishing wages, tax refunds, and Social Security benefits but the Education Department has yet to figure out how the collection scheme would work.
“President Biden has worked to fix the student loan system, make college more affordable, and give Americans a bit more breathing room since he came into office,” White House spokesperson Angelo Fernández Hernández said in a statement. “Republican elected officials have repeatedly attempted to block their own constituents from getting lower payments and receiving the relief they are eligible for.”
They are not "eligible" for getting lower payments because the Supreme Court ruled the scheme unconstitutional.
The Biden administration continues to lie about his power to forgive debt. It's not there. The courts say it isn't there.
But undoing the damage from the president's schemes will take months, and perhaps years, to fix.
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