A Democratic lawmaker who is in charge of the Education Department warned Thursday that President Joe Biden’s administration needs to act quickly to cancel the student loans of borrowers who were already promised relief before Donald Trump takes office. If they don’t, the White House’s plan to help people with their loans could be harmed.
Through changes to the student loan program, the Biden-Harris Administration has done a lot to help people who are struggling because of the rising cost of college, wrote Rep. Bobby Scott of Virginia to Education Secretary Miguel Cardona. Scott is the top Democrat on the House Committee on Education and the Workforce. “As the Administration wraps up its work, I am very worried about the future and whether a lot of this progress will be lost, which will hurt student borrowers in the long run.”
Scott told MarketWatch in the letter that he was most worried about two groups of borrowers who should already have had their debts forgiven. The first group is the thousands of borrowers who were told by the Biden administration that their school loans would be forgiven because they were ripped off. They are still waiting for that help.
Also, lawsuits against some parts of the White House’s student loan plan are making it harder for borrowers to get their loans forgiven through a program for government workers who have debt. In some cases, these people have been in the program for close to or all 10 years, but the court case is getting in the way of their progress.
It is very important that the Department of Education work to help borrowers who have already been told they can get help through these two programs, and they should also work to help others who qualified, Scott wrote in his letter.
A representative for the Department of Education said that they have gotten the letter and are now looking it over.
People who owe money are anxiously waiting for their debts to be forgiven.
After a story in MarketWatch a few days ago about the plight of borrowers who have been told that their debt should be forgiven but are now excitedly waiting for their discharges to be processed in the last few days of the Biden administration, the letter comes.
It also comes less than a week after the Consumer Financial Protection Bureau said that some debtors had to wait months or even years after getting cancellation letters before their debt was actually forgiven. Advocates and politicians have said that problems that happen at both the department and with servicers can make it take longer for people to get help.
The Biden government has tried to change the student loan system in a number of ways, including an unsuccessful effort to make more people eligible for forgiving their student loans. The Education Department under Biden has also cleared up problems with paperwork and logistics so that about 5 million people who qualified for debt relief under existing programs can get their debts forgiven.
In Scott’s message, he is talking about borrowers who can get debt relief through programs that were in place before Biden took office. Some people have been told by the Biden administration that their debt is being forgiven, but they are still waiting for the loans to go away.
A request for information from the Trump transition team wasn’t answered right away, and the team hasn’t said much about how the new Trump administration will handle student loan issues. But if Trump’s first term and public documents like Project 2025 from the Heritage Foundation and policy papers from the America First Policy Institute (which is led by Trump’s choice for education secretary, Linda McMahon) are any indication, the Department under Trump will probably fight debt relief.
In his letter, Scott talked about how people with college loans were in a similar situation as Trump started his first term. Scott said that before former President Barack Obama left office, his government approved more than 200,000 debt relief requests from people who had been ripped off by their schools. However, it took a few years for all of those people to get their debts forgiven.
A Democratic staff member on the House Committee on Education and the Workforce said that Scott “spent a significant amount of oversight time” on these claims being put on hold by Betsy DeVos, who was Education Secretary at the time.
“He thinks there’s a chance that borrowers will be in the same situation,” the source said. So, Scott says, “We know that the Trump administration will attack this area, so we’re just telling the department to do what it can.”
Because of a law called “borrower defense,” people who have been scammed by their schools can get their debt forgiven since the 1990s. Before two big for-profit schools failed during the Obama administration, this process wasn’t used very often. The Education Department took too long to handle these claims and give relief under them when DeVos was in charge.
During Biden’s time in office, the Education Department moved to forgive billions of dollars in debt for big groups of people who went to certain schools. Some of these borrowers are still waiting for their discharges to be processed. The Project on Predatory Student Lending, which represents for-profit college students in court, looked at statistics from the Education Department and found that more than 156,000 borrowers are still waiting.
Fears that a new government could slow down PSLF processes
Scott also talked about borrowers who are trying to get their debt forgiven through a program called Public Service Loan Forgiveness. This program lets government workers and some charity workers get rid of their debt after 10 years of payments. For years, it was hard for qualified borrowers to get help through the program, but the Biden administration made changes that were meant to make the process easier.
Lawyers have fought against a Biden administration payback plan called SAVE, which has made it harder for many borrowers to get their loans forgiven under PSLF. Borrowers must make 120 monthly payments in order to get help from the service. Federal courts stopped the Biden administration from going forward with SAVE, so the Education Department put borrowers in the plan on hold. The months that were spent on this hold don’t count toward PSLF.
Because of this, borrowers are almost done with their 120 payments but haven’t been able to finish them because of the court challenges to SAVE. Another thing is that some borrowers made all 120 payments, but they may still be waiting for their debt to be forgiven because of problems with the servicer or the processing.
PSLF was a target of Trump’s first administration, and Republican lawmakers still don’t like it. They say the relief costs too much for taxpayers and helps doctors, lawyers, and other professionals who can make a lot of money. That makes advocates, Scott, and people who want to borrow money through the program nervous as the Biden government ends.
A Democratic staff member said, “I don’t think we’re sitting here expecting them to get rid of PSLF on Day 1.” “However, Republicans have made it clear that they think way too many people should get lots of money.”
The aide said that Democrats are afraid that the next administration might not publicly end PSLF, but instead could let claims pile up and not process them quickly.
Scott’s letter doesn’t talk about the Biden administration’s failed attempts to give debt relief to more people than were already qualified. Instead, the focus is on programs that have been around for years and let people get out of debt.
Scott wrote, “I look forward to working with you to make sure these borrowers get the help they deserve as soon as possible.”
