discussion Student Debt - Update: GOP lawsuit attempts, Biden allows opt-out; FFEL restrictions

[Vermillion]

Apologies if already posted

 

[ClashAndBurn]

Gonna be real interesting when Ketanji Brown Jackson ends up voting with the 6 conservatives to block Biden's student debt relief.  

[publikcitizen]

they better not do this. wtf is wrong with these batshit crazy conservatives. stop making us miserable!

[Communion]

 

Never forget - progressive policies are popular!

 

Also an update on which loans are being considered part of this:

Quote

The following types of federal student loans with an outstanding balance as of June 30, 2022, are eligible for relief:

• William D. Ford Federal Direct Loan (Direct Loan) Program loans
   
  • Subsidized loans
  • Unsubsidized loans
  • Parent PLUS loans
  • Graduate PLUS loans
  • Consolidation loans, as long as all of the underlying loans that were consolidated were first disbursed on or before June 30, 2022
• Federal Family Education Loan (FFEL) Program loans held by ED or in default at a guaranty agency
• Federal Perkins Loan Program loans held by ED
• Defaulted loans (includes ED-held or commercially serviced Subsidized Stafford, Unsubsidized Stafford, parent PLUS, and graduate PLUS; and Perkins loans held by ED)

Quote

You can identify your loan types by logging on to StudentAid.gov and selecting “My Aid” in the dropdown menu under your name. In the “Loan Breakdown” section, you'll see a list of each loan you received. You'll also see loans you paid off or consolidated into a new loan. If you expand “View Loans” and select the “View Loan Details” arrow next to a loan, you'll see the more detailed name for that loan.

Direct Loans begin with the word “Direct.” Federal Family Education Loan Program loans begin with “FFEL.” Perkins Loans include the word “Perkins” in the name. If the name of your servicer starts with “Dept. of Ed” or “Default Management Collection System,” your FFEL or Perkins loan is federally managed (i.e., held by ED).

The “My Aid” section will also show you the servicer(s) for your loans.

Quote

It depends. All loans eligible for the student loan pause are also eligible for relief, including loans held by ED and guaranty agencies.

ED is assessing whether to expand eligibility to borrowers with privately owned federal student loans, including FFEL and Perkins Loans. In the meantime, borrowers with privately held federal student loans, such as through the FFEL, Perkins, and HEAL programs, can receive this relief by consolidating these loans into the Direct Loan program.

FFEL Joint Consolidation Loans, often referred to as spousal consolidation loans, are not eligible for consolidation into the Direct Loan program under current law.

 

[Communion]

Just to put this information in here if anyone is using it as a reference to look back on.

 

Since September 4th:

 

The two GOP lawsuits thus far entail:

 

 

PACIFIC LEGAL LAWSUIT (PUBLIC SERVICE LOAN FORGIVENESS ARGUMENT):

GOP-aligned law firm is suing on behalf of one of its employees on the claim that already being enrolled in the PSLF program means that the new debt relief will cause him harm, as he claims to live in Indiana, who is charging state tax on the relief but who do not charge state tax on debt forgiven under the PSFL.

 

The borrower's claim largely relies on:

1.  Indiana charging state tax on this set of forgiven debt vs the later forgiveness he'll get.
   • People have already found evidence that the employee used to live in Virginia and work out of D.C.; if he hasn't actually paid income taxes to Indiana, he'll have no standing.
2. That his financial information is on file with the federal government and he'll likely be one of the borrowers the administration can forgive his loans automatically without him needing to imply.
   • The Biden administration already answered this inquiry saying, when they announce the application process, there will also be a process to opt-out for those who may have their information on file due to being enrolled in other forgiveness programs. They even say in their announcement that they take the borrower's legal filing as his application for opt-out and will not be processing him for the $10k. 

This has largely been laughed at online and will likely result in a Clinton-appointed judge finding  no standing.

He's already been denied a restraining order to pause the relief and denied a preliminary injunction:

 

---

 

SIX GOP ATTORNEY GENERALS FILE LAWSUIT ON BEHALF OF THEIR STATES (FFEL LOANS)

 

 

Republican attorney generals for six states have filed a lawsuit on the claim that the loan forgiveness (by way of the APR) includes aspects that "lower the overall federal adjusted income" of Americans and thus harms states by losing them tax revenue;

 

Missouri, who is participating, are arguing that MOHELA is a state agency and its processing of FFEL loans in particular, and Biden's incentivizing consolidating them into federal loans that can be forgiven, would see MOHELA lose out on the interest and thus deny the state of Missouri revenue (it cites MOHELA offering scholarships to Missouri students).

 

More info:

 

Some key points:

• As mentioned in the post from 9/4 above, borrowers with Direct Loans were eligible, but those with FFEL and Perkins loans were not due to many of them being federally-backed but privately-held. The Department of Education were advising people with FFEL and Perkins loans who did not qualify to see if they could consolidate their loans into a new Direct Loan in order to be eligible for the forgiveness. 
• In response to the suit, the Biden administration has announced relief will only be eligible to those who applied for consolidation *before* September 29th, 2022. They also claim this will only apply to those with only FFEL-loans and that borrowers with an FFEL loan AND a Direct Loan may still eligible, meaning about 770k borrowers (out of the 4M Americans with FFEL loans) will be the ones who are now no longer eligible entirely.
• This change is by the Biden administration to basically ensure that the six AG have no standing to file.

 

Another aspect to consider is that many theorize the lawsuit could likely be thrown out for lacking standing, as though Missouri's claim is probably their strongest, the state itself is not MOHELA, and it doesn't make legal sense for Missouri to file *on behalf of* MOHELA when MOHELA, if they thought they were facing damages by the relief, would file a suit on its own.

Edited September 30, 2022 by Communion

[ClashAndBurn]

Announcing the deadline the day after said deadline is... a choice.  

[Communion]

29 minutes ago, ClashAndBurn said:

Announcing the deadline the day after said deadline is... a choice.  

It's demons in corporate Dems' past coming to haunt the party because the same private and commercial lenders that the old guard of the party supported are pushing these efforts.

 

Navient was literally lying to people that they couldn't consolidate which was only worsened by the Dept of Ed telling borrowers there was no foreseeable deadline and that they'd have lots of time to see if they're eligible and apply for consolidation, and to wait for more info:

 

 

This is why progressives are right when the only way to approach progressive policy is to SWING BIG.

 

Commercial lenders and Republicans are trying to limit as many people from loan forgiveness as possible even when Biden tried to play it safe and only forgive up to $20k. It makes no sense to hedge one's bets with appealing to conservatives when the conservative goal is to dismantle progressive policy entirely.

 

The Dept. of Education need to figure out how they'll triangulate over the 770k FFEL borrowers because they were still claiming that FFEL loans ARE eligible for consolidation under the expanded PSFL and upcoming expanded IDR waiver that Biden is set to announce details on in October. 

Edited September 30, 2022 by Communion

[Vermillion]

Was debating which thread to bump on this seeing as this post was already in U.S. politics sticky thread but would be discussed outside of it regardless  

 

 

 

[Vermillion]

 

[ClashAndBurn]

27 minutes ago, Espresso said:

 

Think this pretty much means it's done-zo. They're going to keep it frozen probably indefinitely until they find someone with enough standing to actually kill it.

[Communion]

1 hour ago, Espresso said:

 

 

 

[Vermillion]

@Communion Thanks, figured