Biden Inches Closer to Broad Student Debt Cancellation
- Students with disabilities seeking debt cancellation no longer need to submit documentation.
- The rule change discharges $1.3 billion in reinstated debt for student borrowers.
- Biden has also tasked Cardona with researching debt cancellation up to $50,000 per borrower.
The progressive push to cancel student debt is making piecemeal progress. Although President Joe Biden refuses to cancel debt by executive order and believes the $50,000 in forgiveness per borrower that Senate Democrats urge for is too high, his Department of Education prepares to widen existing avenues to student debt cancellation and explore broader action.
Just two weeks after revising rules to allow students defrauded by colleges to more easily get rid of their debt, the Department of Education announced it would provide relief for student loan borrowers with total and permanent disabilities.
Biden has also directed the department to draft a legal memo exploring strategies for canceling up to $50,000 in student loan borrowers' debt.
Debt Relief Extends to Students With Disabilities
A rule established under President Barack Obama granted federal student debt cancellation to borrowers who were determined permanently disabled by a doctor, the Social Security Administration, or the Department of Veterans Affairs (VA).
Unless the matter involved the VA, borrowers were required to submit documentation over a three-year period to verify that their income did not exceed the poverty line. Failing to file the paperwork kept thousands of eligible borrowers from debt relief.
“Waiving these requirements will ensure no borrower who is totally and permanently disabled risks having to repay their loans simply because they could not submit paperwork.”
The Government Accountability Office found that not submitting the required documentation, rather than possessing too high of an income, accounted for 98% of cases in which loans that had been discharged due to disability were reinstated.
Education Secretary Miguel Cardona has waived the requirement to submit documentation, which is slated to impact over 230,000 borrowers. Of that number, the 41,000 borrowers who had $1.3 billion in loans reinstated due to documentation issues during the pandemic will now see them once again discharged. They will also receive refunds for any payments made.
Biden Explores Canceling $50,000 in Student Debt
Even before Biden took office, a coalition of Senate Democrats and advocacy groups had begun lobbying the then-president-elect to enact sweeping student debt cancellation.
So far, the current administration has made it easier for defrauded students and students with disabilities to obtain debt relief, while also extending the pause on interest and payments for all student borrowers through at least September 30, 2021.
But Biden continues to evade pressure from Democrats to forgive $50,000 of federal student loan borrowers' debt by executive action, telling reporters at a CNN town hall in February, "I will not make that happen." Instead, Biden supports canceling $10,000 per borrower through a congressional bill.
This could change soon, though. According to an announcement from the White House chief of staff on April 1, Biden asked Cardona to compile a legal memo evaluating the viability and legal authority of canceling up to $50,000 in student debt. Attorneys at the Department of Justice are performing a separate legal review.
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