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Education Department Tightens Eligibility For Student Debt Relief

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The Department of Education on Thursday tightened eligibility criteria for President Joe Biden’s student loan forgiveness plan as GOP-led states sued to dam the relief.

The department said those with privately owned federal student loans, including Federal Family Education Loans and Perkins Loans, can not apply for Biden’s student loan forgiveness, backtracking on a previous announcement that said those borrowers could consolidate their loans into federal Direct Loans to acquire relief money.

The change could impact as much as 770,000 people, CNN reported, citing a Biden administration official.

Borrowers who acted before Thursday based on the federal government’s earlier guidance will still be eligible to receive the payment, the department said. The department added that it’s exploring “alternative pathways to offer relief” to those borrowers and is negotiating with private lenders.

In August, Biden announced the federal government would forgive as much as $10,000 per student loan borrower and as much as $20,000 for Pell Grant recipients for those earning as much as $125,000 annually. The White House also prolonged the freeze on student loan payments until January.

The change in eligibility criteria comes because the Biden administration faces a lawsuit from GOP-led states alleging the president lacks authority to saddle taxpayers with bills for many who decide to get a school education.

Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina on Thursday sued to halt the relief plan.

“The Department of Education is required, under the law, to gather the balance due on loans,” Arkansas Attorney General Leslie Rutledge told The Associated Press. “And President Biden doesn’t have the authority to override that.”

White House spokesperson Abdullah Hassan accused the GOP officials involved within the lawsuit of “standing with special interests, and fighting to stop relief for borrowers buried under mountains of debt.”

Republican officials from these six states are standing with special interests, and fighting to stop relief for borrowers buried under mountains of debt. https://t.co/XLZCgW7qBp

— Abdullah Hasan (@AHasan46) September 29, 2022

Meanwhile, Frank Garrison, an Indiana-based lawyer working with Pacific Legal Foundation, a libertarian group in California, also filed a lawsuit to dam Biden’s motion. Garrison claimed he would “face immediate tax liability” consequently of the debt relief, in keeping with Axios. Indiana is among the many states planning to tax the scholar loan relief money, in keeping with AP.

A judge on Thursday denied Garrison’s motion to pause the plan after the Justice Department clarified that the Education Department will allow those granted automatic debt relief to opt out.

The Congressional Budget Office has said the relief would cost as much as $400 billion. But White House officials called that price tag “highly uncertain,” in keeping with The Recent York Times. The CBO estimate for the primary yr of this system is lower than what the administration predicted, the White House added.

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