By Josh Kilroy
Americans for Fair Debt Relief (AFDR) praised the latest effort by the Biden Administration to address the student loan crisis. On Monday, Education Secretary Miguel Cardona released a draft of new federal rules to help beleaguered student loan borrowers.
These proposed rules would empower the Education Department to cancel some or all of the debt for certain groups, including borrowers who outstanding balances are bigger than when they began repayment; loans that have been in repayment for more than 25 years; those who attended low-value for-profit colleges that did not enhance a student’s earnings; and those who qualified for other loan forgiveness programs but did not apply.
The new proposed rules are a big step forward to addressing some long-standing problems with the student loan system. High-interest rates, the capitalization of interest rates during a forebearance, and policies that allowed interest rates to begin while a student was still in school created situations where students started out behind and could never get their balances down. These policies were a gift to Wall Street and the new rules offers a chance to fix this wrong.
Old loans that linger into retirement have tormented seniors for years. Cancelling debt that has been in repayment for more than 25 years would be a huge blessing for millions of American families. Of course, we advocate for the full forgiveness of all student loan debt held by seniors, but the Biden Administration has taken a huge step toward this goal.
The system of loan forgiveness programs has been so complicated and outreach to borrowers has been so poor, that AFDR is glad to see the Biden Administration pro-actively seek to include people who were unaware of the existence of these programs or were thwarted by excessively complicated paperwork.
These proposals will positively impact the lives of many working Americans. One frustration for student loan advocates is that Biden has not had more support in the House of Representatives to pursue a comprehensive approach to solving the student loan crisis. Electing a Democratic majority in the U.S House of Representatives would allow for legislation to address this crisis, rather than relying of Department guidelines, which the Supreme Court has demonstrated a willingness to overturn.
Americans for Fair Debt Relief was formed this year after the Supreme Court struck down President Biden’s plan to forgive $10,000 ($20,000 in the case of Pell Grants) in student loan debt for eligible borrowers. Its mission is to promote two policies: debt forgiveness for seniors; and make student loan debt fully dischargeable in bankruptcy proceedings.
Josh Kilroy is the founder of Americans for Fair Debt Relief.