Business Insider: Biden’s new attempt to cancel student debt ‘would fall far short’ of what borrowers need, Democratic lawmakers say. These are the 5 groups they think should get relief.

By Ayelet Sheffey

President Joe Biden’s Education Department is working on its second attempt at student-debt relief. A group of Democratic lawmakers are pushing it do even more for borrowers.

On Monday, Sens. Elizabeth Warren, Bernie Sanders, Alex Padilla, and Chuck Schumer, along with Reps. Ilhan Omar, Ayanna Pressley, and Frederica Wilson, sent a letter to Education Secretary Miguel Cardona regarding the department’s plans.

After the Supreme Court struck down Biden’s first attempt at debt relief at the end of June, the Education Department announced it would be pursuing a new route for relief using the Higher Education Act of 1965. The HEA has restrictions that require the administration to undergo a process that includes negotiations and public comment, and on December 11 and 12, negotiators are participating in the final session to help craft the draft text for the new relief.

Prior to the session, the department released its proposal for borrowers to be included in relief — and it outlined these groups of borrowers it’s seeking to prioritize: borrowers who have balances greater than what they borrowed, borrowers whose loans entered repayment at least two decades ago, borrowers eligible for relief under targeted repayment plans but have not yet applied, and borrowers who attended schools that left them with unaffordable debt compared to post-graduation earnings.

The group of Democrats wrote in their letter that they think the proposal “would fall far short” of what borrowers need.

“We believe more must be done to improve the draft regulatory text to meet President Biden’s objective of ‘provid[ing] student debt relief to as many borrowers as possible as quickly as possible,'” they wrote. “The Biden Administration should take every opportunity to use the authority Congress has already given it to deliver on the promises made to student loan borrowers.”

The lawmakers are proposing the department take a step further and consider relief for these groups of borrowers:

  1. Cancel all student debt that exceeds the original balance borrowed. The department proposed up to $20,000 in relief for those borrowers, and the lawmakers want to remove the cap.
  2. Cancel the full balance for borrowers who have repaid enough to cover the original balance borrowed — not just an interest waiver.
  3. Allow borrowers who complete at least 20 years of payments to become eligible for relief on a rolling basis
  4. Allow borrowers experiencing financial hardship to qualify for relief, and create a relief category for “unforeseen forms of hardship”
  5. Extend relief to borrowers who experienced errors caused by their servicers

The lawmakers also proposed getting relief to borrowers automatically, without requiring an application. An Education Department spokesperson told Insider that “we have received the letter, are reviewing it, and welcome the input from the Senators.”

“The Biden-Harris Administration is proud of our record of providing relief to borrowers as we work to fix the broken student loan system,” the spokesperson said. “This rulemaking process is about standing up for borrowers who’ve been failed by the country’s broken student loan system and creating new regulations that will reduce the burden of student debt in this country.”

Once negotiations conclude, the department will evaluate whether negotiators reached consensus on each provision in the proposal. After that, the department will allow the public an opportunity to comment on the proposals, and the department might change the text depending on the feedback it receives. The proposed rule will not be formally published until May 2024, according to the department’s regulatory agenda.

Read the full article here.

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