The White House is trying to ease the burden of those bearing student debts by employing a different legal method in reaction to the Supreme Court’s decision to effectively extinguish Biden’s prior plan for student debt forgiveness.
Biden’s initial plan would have forgiven up to $20,000 in federal student loans for 43 million people.
Many borrowers are confused about whether or not they are still obligated to make payments despite the fact that repayments are set to begin in October.
Forgiveness of debt will be granted to some loan holders, although it is unclear which ones and to what extent. The solution will be arrived at through a process of negotiated regulation within the Education Department.
President Joseph Biden promised a 12-month grace period to help struggling debtors once payments resumed, just a few hours after the Supreme Court’s verdict.
Biden added that debtors are not at risk of default and will not experience a negative impact on their credit scores if they do not make payments within the first 12 months after payments resume.
The Student Borrower Protection Center and the Institute of Student Loan Advisors recommend waiting until the fall, when interest is reinstated and the pause expires, to start making payments again, as there is no penalty for not doing so during the moratorium.
The money that was going to be used for payments might now accrue interest over the remaining months.
How Does This New Plan Vary From the Old One?
Under the proposed strategy, the White House intends to use the Higher Education Act of 1965, a comprehensive federal statute that regulates the student loan program, to provide relief for student borrowers.
Biden stated that the act’s authority will provide “the greatest remaining path to provide debt relief to as many borrowers as feasible.”
The law grants the education secretary the authority to “compromise, waive, or release” student loans.
Biden’s White House appealed to the bipartisan HEROES Act of 2003, a statute dealing with national emergencies, for the authority to rescind student loan debt in an earlier attempt to cancel the debt. In a ruling of 6-3, with conservative justices in the majority, the court ruled that the administration needed Congress’ approval before undertaking such an expensive program.
Source: LAS VEGAS SUN