Student loan borrowers expecting relief shouldn’t count on elections

• President Joe Biden’s key plans for broad student debt relief are blocked in court.
• Neither former President Trump nor Vice President Kamala Harris will be able to respond immediately.
• Harris supports Biden’s efforts and will likely continue more targeted relief efforts if she wins the election.

Millions of federal student loan borrowers remain in limbo over debt relief, and the election will not immediately solve the problem.

That’s because President Joe Biden’s latest attempt to provide broad relief is blocked in court by a lawsuit from GOP-led states. Vice President Kamala Harris said she supports Biden’s efforts, but if she wins, she won’t have the opportunity to move the case forward until the court rules. Former President Donald Trump opposed forgiveness altogether and called for abolishing the Department of Education.

Despite failing to provide widespread debt forgiveness, Biden’s Education Department has issued targeted relief that has provided debt relief to nearly 5 million borrowers to date.

Undersecretary of Education James Quaal has been working on these efforts since 2021, trying to improve a higher education system that relies heavily on student loans.

He told Business Insider about this. the transition to the new administration’s priorities will be a “relay race.” He hopes the next president will continue his work beyond simply providing aid.

“We need to make sure we implement student loan programs in a way that protects students from crippling debt,” he said. “But we also need to invest in making these programs available early on, and then making sure those programs reliably lead to graduation and employment.”

The issue was barely mentioned by presidential candidates, drowned out by concerns about the economy, immigration and taxes. This is a big turnaround from the 2020 election, when candidates made ambitious campaign promises. That’s likely because polls show it’s not a top issue for voters. Just 18% of respondents said student debt forgiveness would influence their vote in a May Bankrate poll, and a separate May AP-NORC poll found only three in 10 adults approved of Biden’s actions on the issue.

While more than 40 million Americans still have student loan balances averaging about $38,000, keeping them from buying homes, starting families or saving for retirement, any future president has limited motives—or options—to for widespread relief of the situation.

Without a broad repeal, Biden is cutting aid to targeted groups of borrowers.

Even though Biden’s Department of Education has been stuck on providing broad aid, it has spent the last four years making a host of changes to relief programs, such as public service loan forgiveness, protecting borrowers from repaying defrauded borrowers, and a gainful employment rule that ensures that a borrower’s debt will not be returned. I’m saving after graduation.

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The department also implemented a new income-driven repayment plan, SAVE, designed to lower monthly payments and shorten forgiveness periods. The plan has been blocked in court since July after protests from GOP-led states, and 8 million enrolled borrowers won’t have to make payments for at least another six months as the Education Department works to reprogram its systems and adjust repayment plans for those affected. borrowers.

Some borrowers have lost hope. Constance, 65, has nearly $200,000 in student debt, an amount that has grown significantly since she graduated from law school in 1994. Constance, who asked to be identified by her first name for privacy reasons, went through periods when her children’s expenses took up a large part of her life. her salary. She put her student loans in deferment, meaning she didn’t make payments but accrued interest.

“It’s just out of control at this point and there’s no way I’m going to be able to pay it off,” Constance said.

She’s frustrated because she’ll likely be bidding on Biden’s second attempt at broader student debt relief, which has been blocked in court.

Specifically, the plan would cancel up to $20,000 of student debt for borrowers whose balances have increased due to unpaid interest, and would provide relief for borrowers who first entered into repayment at least 20 years ago.

On Oct. 25, the Education Department unveiled a separate proposal to help borrowers experiencing long-term financial difficulties that prevent them from repaying their loans, including problems related to high child care or health care costs. The department expects to finalize the plan in 2025 and has not commented on how a future administration might affect the aid.

Sarah Partridge, associate director of higher education policy at the left-leaning Action Center for American Progress, told BI that it is difficult to predict what relief student loan borrowers will receive as legal challenges continue.

“We will likely need to see how the current case against the Plan B rule plays out to better understand what exactly is possible in the future,” Partridge said.

Kvaal said that going forward he wants to focus on the way the country funds higher education. He also said borrowers should expect more action to regulate the student loan industry, pointing to the Education Department’s restructuring of servicer contracts over the past year. These changes allowed the department to process debt relief applications more quickly and provide more protections for borrowers to ensure their servicers were meeting their contractual obligations.

Harris vs. Trump on student loans

While both Harris and Trump have provided minimal information about how they will address student debt, Partridge said it’s helpful to look back at their previous actions.

“I expect continued improvements and limited expansion of debt relief where legally possible under the Harris-Walz administration,” Partridge said.

She said the Trump administration has “not taken any serious steps” to address long-standing problems such as delays in public service loan forgiveness and borrower defense applications. Borrowers should not expect expanded aid or reforms if Trump wins the election. He also praised the Supreme Court’s decision to overturn Biden’s debt forgiveness.

The makeup of Congress will also affect what’s in store for student loan borrowers—Republican control would mean the previously introduced Preventive Preemption Act could be signed into law.

“Where is the forgiveness for the guy who didn’t go to college but works to pay off his loan on the truck he drives to work? What about the woman who paid off her student loans but is now struggling to afford her mortgage?” “Is the administration helping them? Of course not,” Sen. Bill Cassidy, the top Republican on the Senate Education Committee, said in a recent statement.

Regardless of who wins the election, legal challenges to debt relief will keep borrowers in limbo. Kvaal said the fight is not over and the Biden administration will work to provide relief under its authority for as long as it can.

“He has used his full authority to offer relief to borrowers,” Kvaal said. “We are currently fighting in court to offer more debt relief, but we are also taking dozens of actions that are not being challenged in court that have helped millions of borrowers.”