Since the legalization of sports betting in New Hampshire and its partnership wi …
Student loan debt forgiveness committee convenes amid growing frustration among borrowers
Returning to the world of making student loan payments has been a chaotic experience. According to records from the Education Department, one borrower received a bill for their entire balance of over $108,000, which was due all at once. The company responsible for managing these loans had such high call volumes that some borrowers spent up to an hour on hold, and only half of those who called were able to speak with someone. Approximately 2.5 million borrowers either did not receive their bills or received them with very little notice. Additionally, some borrowers whose loan balances had already been forgiven still received bills.
Student loan borrowers are expressing their frustration with the situation. The impact on the economy is still unknown as well. A survey conducted by Transunion, a credit reporting agency, revealed that two-thirds of borrowers were not aware that payments were resuming after a 3½ year hiatus due to the pandemic.
The total amount of unpaid student loan debt in America has reached approximately $1.7 trillion.
To address some borrowers’ debt and provide loan forgiveness, a committee of experts and stakeholders convened as part of President Joe Biden’s plan. This plan, known as “negotiated rulemaking,” is an alternative strategy following the Supreme Court’s rejection of the original proposal for widespread loan cancellation. The committee’s discussions began in October and will continue on Tuesday.
The negotiating process is a method that the Biden administration has turned to in order to address the issue. It has been used in the past to create rules related to higher education, such as ensuring that colleges produce graduates who can manage their student debt financially.
During the first day of the second meeting, committee members debated eligibility for certain relief provisions and raised concerns about the legality of loan forgiveness. The discussions will resume on Tuesday at 10 a.m. Eastern time and will be livestreamed, allowing the public to participate.
What’s on the agenda?
In this round of discussion, the Education Department has asked the committee to consider five groups of borrowers. While the Biden administration intends to provide loan forgiveness on a wide scale, there will be limitations due to potential legal challenges. The five groups include borrowers who:
- Have been making loan payments for 25 years or longer
- Have outstanding federal student loan debt that exceeds the amount originally borrowed, due to accruing interest
- Borrowed money for career-training programs that resulted in excessive debt or provided inadequate income for graduates, or attended colleges with high student loan default rates
- Are eligible for income-based repayment plans or Public Service Loan Forgiveness, but have not applied for these options
- Have a financial hardship that is not currently addressed by the student loan system, such as chronic illness affecting the borrower’s ability to work
Takeaways from Day 1 of the second round of student loan forgiveness talks
- Some negotiators emphasized the importance of considering the interest and time spent in default when providing relief to borrowers with outstanding balances. They also discussed determining eligibility based on certain criteria, such as loans taken out for public service jobs.
- Scott Buchanan of the Student Loan Servicing Alliance expressed concerns about the legality of loan