Predatory Lending

Biden Administration Unveils $39B of Student Debt Relief as Part of Income-Driven Repayment Fix

The Biden administration announced that it would cancel $39 billion of student debt owed by more than 804,000 borrowers whose debts have been outstanding for more than 20 years, Politico reported. The Education Department said that it was implementing its plan, announced in April 2022, to compensate borrowers for what it called “historical inaccuracies” and other failures in how the agency and its contracted loan servicers have managed the income-driven repayment programs. The program is separate from President Joe Biden’s sweeping student debt relief program that the Supreme Court struck down last month. But the announcement comes as the Biden administration looks to highlight its alternative pathways for delivering student debt relief in the face of that legal defeat.
 
Click here for the Department of Education's press release.

 

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Biden's Plan B on Student Loan Forgiveness Relies on Higher Education Act: What to Know

President Joe Biden is launching another effort to forgive at least some federal student loan debt after the Supreme Court struck down his initial proposal to wipe away as much as $20,000 for borrowers, ABC News reported. The White House's new approach is based on the Higher Education Act (HEA) of 1965, which provides government-backed student loans and grants the U.S. Education Department the ability to "compromise, waive or release loans." Further details will be revealed during a rulemaking process: Implementing any changes will take multiple steps over months, the National Economic Council's deputy director, Bharat Ramamurti, said. It's unclear if any debt cancellation offered through HEA would be of a similar scope and scale as Biden's first program, which the White House said covered 43 million borrowers — with 20 million expected to see their student loans entirely erased. Conservatives had sharply criticized that loan forgiveness as a misuse of tax dollars and an excessive and unconstitutional "scam," with some saying it didn't address underlying cost problems in education. Ramamurti said that "even a typical rulemaking process can take some amount of time. You have to do a proposal, it has to receive comments, it has to be finalized and so on." A negotiated rulemaking process is "even more complicated," Ramamurti said, and will involve public hearings. The Education Department will hold one virtually on July 18.
 
In other news, Republicans are moving forward with their own proposed student loan debt solution, ABC News reported. Conservative lawmakers from both chambers, vocally opposed to the president's landmark program, which they said was an overreach, celebrated the court's decision. Even with the 6-3 ruling against him, President Joe Biden laid out alternative options to his original call for sweeping debt forgiveness, though some specific details remain unclear. An on-ramp to repayment will begin later this fall, according to Biden. It will include a 12-month grace period after the pause unfreezes in September. Federal student loan borrowers should expect interest on their debts to kick back in on Sept. 1 and payments to resume starting in October. Repayments had been paused for more than three years amid disruptions from COVID-19. Recently, Louisiana Sen. Bill Cassidy, the ranking member of the Senate's Health, Education, Labor and Pensions committee, and House Education and the Workforce Committee Chairwoman Virginia Foxx of North Carolina requested to meet with Education Secretary Miguel Cardona on or before July 20 to discuss federal student aid servicer roadblocks, as well as internal memos and documents about the department's strategy for the return to repayment. Cassidy and Senate Republicans previously sent a letter to the secretary seeking to halt Biden's student debt relief plan in early June, calling it an "affront to the millions of Americans [who] do not have student loans." Read more.

 

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White House Urges States to Join Crackdown on Surprise Consumer Fees

Top White House officials and the head of the Consumer Financial Protection Bureau (CFPB) on Wednesday urged states to expand efforts to crack down on surprise fees consumers are forced to pay on everything from rental housing to cable bills, Reuters reported. The push is part of President Joe Biden's government-wide effort to reduce or eliminate "junk fees" that jack up costs for consumers. Some agencies have already taken action, including a proposed rule by the CFPB to cut most credit card late fees and a Department of Transportation proposal to require airlines to disclose all fees up front. Biden's domestic policy adviser, Susan Rice, said some fees were slapped on without the consumer's knowledge. "There are the surprise fees that show up after a hospital visit or predatory fees like bank overdraft fees," she said. Biden has vowed to keep attacking the issue on the federal level, and the White House said on Wednesday that action by state governments is also "essential" to rid the U.S. economy of billions of dollars in "unnecessary, unavoidable or surprise charges." To boost their efforts, the White House hosted a virtual meeting on Wednesday with hundreds of state legislators, some of whom shared actions they have taken to reduce or eliminate junk fees by beefing up enforcement, passing new laws or even changing their contracts with third-party providers.
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