2023-05-13 23:50:24
Education Secretary Miguel Cardona revealed during a recent hearing that the Biden Administration is preparing to resume paying down federal student loan debt that was interrupted amid the COVID-19 pandemic.
during a audience held May 11 in the Senate Appropriations Committee, Sen. Katie Britt (R-Ala.) quoted remarks by White House press secretary Karine Jean-Pierre, who said, regarding the ceiling on the debt, that “if you buy a car, you are expected to pay the monthly payments. If you buy a house, you are expected to pay the mortgage every month. That’s the expectation.”
Britt said that he believes that “that same logic should be applied to student loans,” to which Cardona responded: “We agree and we are preparing to restart repayment because the emergency period is over, and we are preparing our borrowers for restart it”.
At the start of the pandemic, in March 2020, the government suspended student loan payments. Since then, two presidential administrations have delayed the end of the suspension period eight times.
In August, after launching the debt forgiveness plan, the White House announced that repayments would begin on January 1, 2023. But this date was pushed back after legal challenges against the forgiveness plan reached the Court. Supreme.
The Supreme Court is currently reviewing lower court orders that blocked the Biden Administration’s student debt forgiveness plan. Payments are scheduled to resume 60 days after June 30, or 60 days after court ruling if court ruling occurs before June 30. The court is expected to rule on the matter this summer.
In November, the Department of Education revealed that it had received applications from 26 million people for the loan forgiveness program, of which 16 million were approved. The trial court order prevented the Department from considering any further applications, as well as from forgiving the student debt.
Cardona added that the HEROES Act, signed into law by President George W. Bush in January 2002, allows him to “create a waiver for those who are significantly affected by the pandemic.”
“We recognize, after three years of payments on hold through two administrations, that restarting refunds is going to be a very important step, and we want to make sure it gets done right,” Cardona said.
“We are confident that targeted debt relief will address some of the concerns of some of our struggling borrowers right now. But as they go back into reimbursement, it’s really important that we provide them with support.”
Student Loan Forgiveness Plan Problems
Under Biden’s forgiveness plan, people with an annual income of less than $125,000 who received a Pell Grant while in school could see up to $20,000 of their student loan debt canceled.
In an appearance before the House Committee on Education and Workforce on March 23, Rep. Burgess Owens (R-Utah) warned that Biden’s plan will “mortgage our children’s future.”
“The Biden Administration’s proposal is an attempted patch-up that takes on a structural problem that will only worsen the problems of rising prices and low quality of education,” said. “This has left millions of Americans with student debt that far exceeds the financial value of their degree.”
In a comment Published March 6 in The Epoch Times, Daniel Lacalle, chief economist at the Tressis hedge fund, criticized the idea of student loan forgiveness, saying it does nothing to address the cost of tuition.
On the contrary, the program may even increase tuition, as universities see that the government will subsidize those who take out hard-to-pay loans, he warned.
“In addition, by subsidizing the already indebted, banks may have an incentive to make loans to students who are less likely to repay. It is likely that a wave of non-performing loans will be created based on the idea that this plan will be prolonged and even increased,” Lacalle said.
According to a budget model of the proposed student loan forgiveness plan conducted by Pennsylvania’s Penn Wharton University, the cost of the program could amount to between $333 billion and $361 billion over a 10-year period.
On May 10, the Republican-controlled House Workforce and Education Committee introduced a resolution to invoke its authority under the Congressional Review Act (CRA) to end the education program. Biden loan forgiveness.
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