‘Start here’: Education Department cuts student loan forgiveness plan

The Department of Education on Thursday reduced President Joe Biden’s federal student loan forgiveness program to protect against legal challenges from six states, with new guidelines that initially excluded at least hundreds of thousands of borrowers. declared eligible for the program.

The ruling excludes people who took out federal loans that, while guaranteed by the government, were technically managed by private banks.

ABC News senior national politics reporter Anne Flaherty spoke to ‘Start Here’ on Friday about the surprise decision, what triggered it and how it will affect Americans in loan debt. students.

START HERE: Anne, is it possible that the government is behaving like a crook? What is happening here?

ANNE FLAHERTY: You were asking if the president can do that and he can — to the point where a judge tells him he can’t. So that’s pretty much the story of every presidency. Two things we need to know. First, what he did was absolutely unprecedented. The student loan program has intensified since the days of Lyndon B. Johnson. Basically, no president has ever looked at students and said, “Wait, no, nevermind. Let’s go ahead and don’t make you pay that money back. In a way, a judge could look at this and say, ‘Hey, wait, what are you doing?”

The other thing is that it builds on a lot of what was passed after 9/11. It was a law that said the president could reduce or forgive student loan debt in the event of a national emergency. But he’s also the same president who recently went on national television and declared the pandemic to be over. That’s the Republican argument about it.

I don’t think it’s a coincidence that on the same day the Republicans filed this lawsuit, we also had the Department of Education withdraw certain aspects of this plan. I think it’s a legal maneuver to try to make it stick and work, because we have an election coming up and he wants to keep it.

START HERE: Let’s talk about these lawsuits first. I was asking everyone ‘Can Biden do this?’ and everyone said, “Yeah, the Ministry of Education has a lot of authority. Who exactly is filing the lawsuits and what are they challenging?

FLAHERTY: We have six states that have filed their case in federal court in St. Louis. All of the red states, all of the conservatives, say, “Listen, the president says the pandemic is over. What is the urgency here? You cannot erase these loans. At the same time, when you read this complaint in court, it reads like a political statement. He talks about the economy and its misery. Why is the President giving a giant stimulus check only to people who have gone to college?

They say it’s patently unfair. The White House is backtracking. They say we will fight against it. They gave me a statement saying that Republicans are working against the interests of middle class and working class families. So the next move is through the court.

START HERE: Right now Anne, who is about to get her loan forgiven and who might not be?

FLAHERTY: So everyone was supposed to get loan forgiveness up to a point. What has changed here is that we are talking about these federally guaranteed loans that were guaranteed by the federal government but managed by private banks. The Republicans were therefore saying that people may be hurt by this decision. It’s the student loan managers, the managers, who are going to be at a disadvantage.

START HERE: Mainly private companies.

FLAHERTY: That’s right. And so the Ministry of Education quietly changes the language on its website. They used to say, well, if you can bundle all of these loans that are run by private banks into these federal direct loans – that’s what they call them – that will qualify for relief. So they’re changing the website to say, if you’ve consolidated those loans by September 29 into federal direct loans, then they’ll qualify.

START HERE: Wait, that was yesterday. They said, like, if you did it yesterday?

FLAHERTY: Yes, exactly. So it’s a bit of a wait, what? People will wake up and say, if you have these types of loans. So, you know, overall the loan relief program is still there. A judge did not block it. People should keep pushing forward, asking the government for relief on this. They must not stop. We don’t know where it takes us next. So to be determined.

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