Biden’s Forgiveness of Students Under Federal Student Loans: A State Lawsuit in Missouri and the U.S. Attorney’s Office

Up to $10,000 of the federal student loan debt for people who earned less than $125,000 in 2020 and 2021, as well as married couples or heads of households earning less than $250,000 annually in those years, will be forgiven, under Biden’s plan.

The Department of Education moved to exclude privately held federal loans from theforgiveness plan, which could make it harder to argue for cancellation of student debt, says an assistant law professor at the University of Alabama.

“Borrowers with privately held federal student loans who applied to consolidate their loans into Direct Loans before September 29, 2022 will obtain one-time debt relief. Most of the borrowers with FFEL loans have stopped using the program. This program is not the same as Direct Loans.

The lawsuit was filed in Missouri by state attorneys general from Missouri, Arkansas, Kansas, Nebraska and South Carolina.

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.

“Republican officials from these six states are standing with special interests, and fighting to stop relief for borrowers buried under mountains of debt,”said White House spokesman Abdullah Hasan in an emailed statement.

“The President and his administration are lawfully giving working and middle class families breathing room as they recover from the pandemic and prepare to resume loan payments in January,” he said.

The Case Forgiven Student Loans That Are Not Forbidden By the Higher Education Relief Opportunity for Students Act of 2003: A Tribute to the Biden Administration

The Biden administration’s announcement came hours after a borrower sued, arguing that he would be forced to pay state taxes on the amount canceled – an expense he would otherwise avoid.

If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness. Pell grants are awarded to millions of low-income students each year, based on factors that include their family’s size and income and the cost charged by their college. These borrowers are also more likely to struggle to repay their student debt and end up in default.

The Congressional Budget Office estimated this week – before the administration excluded FFEL borrowers – that Biden’s plan could cost the government $400 billion but warned that the estimate relies on several assumptions and is “highly uncertain.”

The Biden administration’s plan to cancel debt was a factor in student loan forgiveness being 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. The FTC reached nearly $30 million in settlements in the last eighteen months for students who were promised relief on their student loan payments.

The Biden administration thinks that the Higher Education Relief Opportunity for Students Act of 2003 gives the Education Secretary the authority to cancel student debt in order to address financial damage caused by Covid-19.

The lawsuit was filed in October on behalf of two borrowers who did not qualify for debt relief.

Abby Shafroth, staff attorney at the nonprofit National Consumer Law Center, previously told CNN that she believes the merits of the Biden administration’s legal statutory authority are strong and that it’s unclear who would have legal standing to bring a case and want to do so. Standing to bring a case means that an injury must be inflicted on a person to justify a lawsuit.

If the standing hurdle is cleared, a case would be heard by a district court first – which may or may not issue a preliminary injunction to prevent the cancellation from occurring before a final ruling is issued on the merits of the hypothetical case.

Several recent US Supreme Court decisions have touched on executive power, limiting the federal government’s authority to implement new rules. While the Supreme Court takes up a small number of cases each year, lower courts may look at what the justices have said in those cases when assessing the Department of Education’s authority.

How to Avoid Student Loan Forgiveness Scam in the Days of the Biden Term: Steps Towards Preventing Scams

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.

At the state level, there will be reports on scam in their jurisdiction. And the White House will work to coordinate between departments and agencies for a scam prevention effort, including the Federal Trade Commission, Consumer Financial Protection Bureau, the Education Department’s inspector general, secretaries of state, state attorneys general and others.

There is no need for borrowers to provide any documents, including tax records, in order to log into the application. Instead of having to provide documents that verify that you, as an individual, earned less than $125,000 in 2020 or 2021 or, as a couple, less than $250,000, the application simply asks borrowers to check a box to “certify under penalty of perjury under the laws of the United States of America that all of the information provided on this form is true and correct.”

“You might be contacted by a company saying they will help you get loan discharge, forgiveness, cancellation, or debt relief for a fee. Federal student aid doesn’t require you to pay for help. 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.

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.

This month, the application window for student debt relief will open. You should learn more about how to avoid student debt relief scam, and the steps you should take ahead of time. The picture is called ” 76ERkrvEAT”

Biden forgiveness application scams: How will they go live? A brief update from the Institute of Student Loan Advisors, a nonprofit that offers free counseling to borrowers

“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 a great step,” Mayotte added. “There’s only two things we can do as a community [to prevent fraud]. One is to educate borrowers and the other is enforcement.”

“It’s an all-government approach, because what we know is it’s already happening, that there are evil people who will be trying to use a program like this, that’s trying to help people, and run their own frauds and scams to somehow get money or personal information about people,” says Richard Cordray, the chief operating officer of Federal Student Aid, a branch of the Education Department.

“What we’re attempting to do here is to give as much relief as possible to the hard working former students who deserve this relief,” said Cordray. “We’re moving at warp speed to get the application and the process going here.”

To avoid being vulnerable in the first place, it is important to give more information on what the forgiveness application will look like and when it will be available.

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.

Source: https://www.npr.org/2022/10/05/1126904167/student-loan-forgiveness-application-scams

Taxing the Public Service Loan Forgiveness as a Tax Benefit: The Tax Foundation and the Arizona Attorney General’s Filibuster

“In one way, it’ll help,” she says. “But if I know the scammers, they’ll use that as an opportunity too: ‘The application’s out. You have to do it quickly. Time is not very long. Now that the applications are out, let us help you to make sure you don’t miss it.’ So 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.

If you want to receive debt relief, you must submit an application and we can review it, determine eligibility and work with your loan servicer to process it. The department told borrowers that they would contact them if they needed any more information.

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 charge is being led by Republican states. In addition to the lawsuit filed by six Republican-led states that claim they could be hurt financially by the forgiveness plan, the Arizona Attorney General also filed a lawsuit last week.

According to the lawsuit, the policy could cause the state of Arizona to lose tax revenue because it does not consider the loan forgiveness as taxable income. The attorney general office is not able to recruit because of the forgiveness policy. Currently its employees may be eligible for the federal Public Service Loan Forgiveness program, but some potential job candidates may not view that as a benefit if their student loan debt is already canceled, the lawsuit argues.

Those who meet the program’s annual income limits — up to $125,000 per individual or $250,000 per household — can apply online at https://studentaid.gov/debt-relief/application.

The Biden administration has agreed in court documents to hold off on canceling any debts until October 23, just after the application officially opened. Once processing begins, most qualifying borrowers are expected to receive debt relief within weeks.

It’s very easy. “It’s fast, applications can be done on a phone or desktop, and take less than 5 minutes to finish,” Biden said in the press conference.

Student Loan Forgiveness and the Wisconsin Taxpayer’s Group: A Supreme Court Decision Deciding to File a U.S. Tax Case

The application asks for borrowers’ name, date of birth and social security number, among other things. The form is available in both English and Spanish on desktop and mobile sites. It will remain open through the end of December.

Supreme Court Justice Amy Coney Barrett rejected a challenge to the Biden administration’s student loan forgiveness program on Thursday, declining to take up an appeal brought by a Wisconsin taxpayers group.

This case will continue in the Seventh Circuit, where it is being heard on appeal. A federal district court judge dismissed the lawsuit earlier this month, on ground that the taxpayer group lacked “standing.” The taxpayers could not show a personal injury as is required to bring a suit. According to the Supreme Court in 2007, if every federal taxpayer could challenge the government’s spending, the federal courts would cease to be courts of law.

The lower court ruled in the case and that’s why she acted alone. She did not want the matter to go to the full court. The court docket showed her denial as a single sentence.

The lawsuit that was rejected by the federal court was brought by six Republican-led states.

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 facing lawsuits from the Attorney General of Arizona and other conservative groups.

An easy application to get student loans without needing a password: the Brown County Taxpayers Association (BCTA) filed a petition against the Biden administration

Justice Amy Coney Barrett is a member of the Seventh Circuit Court of Appeals. Presumably the court’s other justices agreed with her decision.

A federal district court in Missouri tossed out a challenge brought by six GOP-led states that had been closely watched by the Supreme Court.

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

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.

The situation is not easy to understand. There is a lot of political disagreement and litigation surrounding student loan forgiveness. On Friday, a federal appeals court issued a temporary stay that halted the potential discharge of debt. The Biden administration made it clear that borrowers should submit applications, even though they don’t have to. The White House said the order did not reverse the trial court dismissal of the case or suggest that the case has merit.

It took 22 million people to apply for the website in the first week of it being open, 8 million over the weekend, compared to six people who were able to sign up for the website on the first day it was open. We talked with Department of Education officials about how many people should participate in the program, though we did not have a role in designing it, and we shared our research about how administrative burdens make vital public services harder to access. Even so, it was astonishing for us to see just how simple it is to apply for debt relief.

Setting aside the conflict over policy, the streamlined application shows what is possible when government prioritizes the public in the delivery of public services. The form can be completed in a couple of minutes. It works on both a computer and a smartphone, and it is available in Spanish and English. A welcome page, a form and a confirmation page help to make up the three pages. People can actually be deterred from starting by the fact that beneficiaries don’t need to create an account with a password. Applicants need five pieces of information: name, social security number, date of birth, phone number and email address. That is all.

Interpretation of the Texas District Court ruling that the student loan forgiveness program is an unconstitutional exercise of Congress’ legislative power and will appeal

The Texas federal judge found the law didn’t provide clear congressional authorization 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 White House strongly disagrees with the District Court ruling, and the Justice Department said it will appeal the decision.

“For the 26 million borrowers who have already given the Department of Education the necessary information to be considered for debt relief – 16 million of whom have already been approved for relief – the Department will hold onto their information so it can quickly process their relief once we prevail in court,” Jean-Pierre said.

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.

The rule of law requires Americans to have their voices heard by the government, according to the president of the Job Creators Network Foundation.

If litigation doesn’t work out, payments will resume 60 days after the debt cancellation program is implemented or 60 days after June 30, whichever is later.

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

Cardona said he wanted borrowers to know that the Biden-Harris administration was committed to fighting to deliver student debt relief for millions of Americans.

By the time the pandemic hit, Bicknell had made about six years of payments on her student debt, paying off nearly $110,000. Despite those payments, her balance is nearly just as much as what she originally borrowed due to interest. She expects the remaining debt, worth $100,000 or more, to be wiped away in January of 2024, if she is eligible for debt cancellation from the Public Service Loan Forgiveness program.

The pause has been extended eight times, the latest of which was last month when Biden pushed back the restart date from January until after pending litigation over his student loan forgiveness program is resolved – or the end of August, whichever comes first. The administration hopes to be able to cancel some student debt before it restarts.

As long as all other qualifications are met, these borrowers will still receive credit for the public service loan forgiveness program even though they don’t have to make payments.

The First Circuit Court Action against President Biden’s Plan to Forgive Student Loans Under Covid-19: A Case Study Against the Secretary of Education

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

A federal repayment plan ties monthly payments to the income and family size of the borrowers. The bigger the monthly loan payment is, the more net income a borrower has.

While teaching at a community college, Lauren McClain has been making payments on her student loans and working in the public sector. 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 have already announced they will hear arguments in a different case this term, 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 the parties to discuss if Biden’s plan was legally authorized and if it was properly adopted.

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.

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 agreed only to the latter request.

“This is the second of two cases in which lower courts have entered nationwide orders blocking the Secretary of Education’s plan to use his statutory authority to provide dept relief to student-loan borrowers affected by the Covid-19 pandemic,” Prelogar argued in court papers.

The nine million borrowers who received the inaccurate emails have now started to receive new emails from the government correcting the error. They haven’t been approved or rejected despite the applications being received.

The Department of Education said in a statement that “communicating clearly and accurately with borrowers is a top priority” and that it is in close touch with the outside vendor, Accenture Federal Services.

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.