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  • Big questions on student loan forgiveness loom in 2023 | CNN Politics

    Big questions on student loan forgiveness loom in 2023 | CNN Politics

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    CNN
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    Student loan borrowers are starting 2023 with a lot of uncertainty.

    The fate of President Joe Biden’s major student loan forgiveness program lies with the US Supreme Court, and it could be as late as summer before the justices rule on whether the policy can take effect.

    The pandemic-related pause on student loan payments remains in place. But a restart date is up in the air, dependent on when the Supreme Court rules on the forgiveness program.

    Meanwhile, significant changes are coming in July to the existing Public Service Loan Forgiveness program that aids government and nonprofit workers. And a new income-driven repayment plan that could lower payments for some federal student loan borrowers is in the works.

    The mired rollout of Biden’s forgiveness program has created confusion for borrowers. Here are some of the big questions surrounding student loans this year:

    In late February, the Supreme Court will hear arguments in two cases concerning Biden’s student loan forgiveness program, which could deliver up to $20,000 of debt relief for millions of low- and middle-income borrowers.

    A decision on whether the program is legal and can move forward is expected by June. Until then, it is on hold and no debt will be discharged under the program.

    Biden’s student loan forgiveness program has faced several legal challenges since the president announced the program in August. The Department of Education received about 26 million applications for debt relief by the time a federal district court judge struck down the program on November 10.

    Lawyers for the Biden administration say that Congress gave the secretary of education “expansive authority to alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies,” like the Covid-19 pandemic, according to a memo from the Department of Justice.

    But litigants argue the Biden administration has overstepped its authority, and other recent Supreme Court decisions have ruled against aggressive executive agency actions. The justices curbed the Environmental Protection Agency’s authority to set certain climate change regulations last year, for example, as well as limited the federal government’s power to implement a pandemic-related eviction moratorium in 2021 and mandate Covid-19 vaccinations in 2022.

    For the third consecutive time, federal student loan borrowers begin a new year without having to make payments on their loans thanks to a pandemic-related pause.

    Payments were set to resume in January, but the Biden administration extended the pause after its student loan forgiveness program was halted by federal courts. Officials had told borrowers debt relief would be granted before payments restarted.

    The payment pause will now last until 60 days after litigation over Biden’s student loan forgiveness program is resolved. If the program has not been implemented and the litigation has not been resolved by June 30, payments will resume 60 days after that.

    Borrower balances have effectively been frozen since March 2020, with no payments required on most federal student loans. During this time, interest has stopped adding up and collections on defaulted debt have also been on hold.

    For some borrowers, the pause on payments delivers an even bigger benefit than Biden’s forgiveness program ever could.

    The yearslong pause cost the government $155 billion through the end of 2022, according to an estimate from the Committee for a Responsible Federal Budget.

    The Public Service Loan Forgiveness program allows certain government and nonprofit employees to seek federal student loan forgiveness after making 10 years of qualifying payments – but it has been plagued with implementation problems for years.

    A yearlong waiver that expanded eligibility for the PSLF program expired on October 31, but some of those temporary changes will be made permanent starting in July.

    Under the new rules, borrowers will be able to receive credit toward PSLF on payments that are made late, in installments or in a lump sum. Prior rules only counted a payment as eligible if it was made in full within 15 days of its due date.

    Also, time spent in certain periods of deferment or forbearance will count toward PSLF. These periods include deferments for cancer treatment, military service, economic hardship and time served in AmeriCorps and the National Guard.

    Starting in July, borrowers will receive some credit for past payments when they consolidate older loans into federal Direct Loans in order to qualify for the program. Borrowers previously lost all progress toward forgiveness when they consolidated. After July, they will receive a weighted average of existing qualifying payments toward PSLF.

    The new rules will also simplify the criteria to meet the requirement that a borrower be a full-time employee in a public sector job. The new standard will consider full-time employment at 30 hours a week. In particular, the change will help adjunct faculty at public colleges qualify for the program.

    The Biden administration has proposed a new income-driven repayment plan that is intended to make payments more manageable for borrowers, though it’s unclear when it could take effect.

    Several income-driven repayment plans already exist for federal student loan borrowers, but the new proposal could offer more favorable terms.

    The new rule is expected to cap payments at 5% of a borrower’s discretionary income, down from 10% that is offered in most current income-driven plans, as well as reduce the amount of income that is considered discretionary. It would also forgive remaining balances after 10 years of repayment, instead of 20 or 25 years, as well as cover the borrower’s unpaid monthly interest.

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  • Having a credit card with trip insurance could save you thousands on your next vacation | CNN Underscored

    Having a credit card with trip insurance could save you thousands on your next vacation | CNN Underscored

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    CNN
     — 

    CNN Underscored reviews financial products such as credit cards and bank accounts based on their overall value. We may receive a commission through the LendingTree affiliate network if you apply and are approved for a card, but our reporting is always independent and objective. Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.

    Everyone is in need of that next big vacation, but before you go ahead and click the “book now” button, you’ll want to make sure you’re using a credit card that will cover you in case something unfortunate happens. Many people are unaware that some credit cards include various travel insurance benefits, which could come in handy during your next trip. For instance, if you ever need to cancel your trip because you get sick, or if your flight is delayed and you have to stay the night at a hotel, the right credit card can have you covered.

    Knowing the ins and outs of these travel insurance protections and which credit card provides what coverage could potentially save you a boatload of money. Hopefully you’ll never have to use these benefits, but if you do, your wallet could be pleasantly surprised.

    Credit card travel protections are not the same thing as travel insurance, which is a broad policy you can buy to cover a specific trip or series of trips. The travel protections that come on eligible credit cards are tailored to cover specific issues you might encounter on a trip. There are typically seven different benefits that credit cards can potentially cover — here’s a quick explanation of each type of coverage:

    Trip cancellation and interruption insurance: If you need to cancel a covered trip or if your covered trip is interrupted in the middle of travel due to illness, injury, weather or terrorist incident, this coverage will reimburse you for your nonrefundable expenses related to the delay cancellation. There are a number of exclusions, so you’ll need to read the fine print of your particular credit card for details.

    In regards to the coronavirus pandemic, this is where your credit card can help you out. If you fall ill with coronavirus and need to cancel your trip or cut it short as a result, you can file a claim with your credit card if it has trip cancellation or interruption coverage. The same coverage also applies if a quarantine is imposed by a physician due to coronavirus, or if an authoritative power imposes travel restrictions.

    However, if you choose to cancel a trip as a precautionary measure, this isn’t considered a covered event, and the travel insurance on your credit card most likely won’t reimburse you for your lost expenses.

    Trip delay insurance: If your common carrier (meaning an airine, bus, cruise ship or train) is delayed for a certain number of hours due to a covered reason, such as weather or mechanical issues, you can be reimbursed for many eligible out-of-pocket expenses, such as meals, transportation, lodging and toiletries.

    Lost luggage reimbursement: If your carrier loses or damages your carry-on or checked luggage, you’ll be reimbursed up to a maximum amount.

    Baggage delay reimbursement: If your checked baggage is delayed for a certain number of hours, you’ll be reimbursed up to a maximum amount per day for eligible essentials, such as clothing and toiletries.

    Rental car insurance: Many credit cards offer rental car damage coverage, which allows you to waive some of the pricey insurance policies offered by car rental agencies.

    Some cards offer what’s known as “secondary” car rental insurance, which means your credit card coverage will only kick in after any other insurance coverage takes place, such as your own personal auto policy. Other credit cards offer “primary” car rental insurance, meaning you don’t have to worry about filing a claim with anyone else first.

    Travel accident insurance: If you (or in some cases, your immediate family members) suffer an accidental death or dismemberment during travel, your beneficiary can make a claim for coverage on credit cards with this policy.

    Emergency evacuation insurance: If you’re injured or become sick during a trip far from home that results in an emergency evacuation, you’ll be covered for eligible medical services and transportation.

    Chase Sapphire Reserve: Best overall for travel protections
    Chase Sapphire Preferred Card: Best travel protections with a low annual fee
    The Platinum Card® from American Express: Best for earning flexible rewards
    United Club Infinite Card: Best for United flyers
    Delta SkyMiles® Reserve American Express Card: Best for Delta flyers
    Bank of America® Premium Rewards® credit card: Best for earning cash back
    Ink Business Preferred Credit Card: Best for business travelers

    Here’s a look at the specific travel protections that are available on each of these credit cards:

    Trip cancellation / trip interruption Trip delay Lost luggage Baggage delay Rental car Travel accident Emergency evacuation
    Chase Sapphire Reserve Yes Yes Yes Yes Yes Yes Yes
    Chase Sapphire Preferred Yes Yes Yes Yes Yes Yes No
    American Express Platinum Yes Yes Yes No Yes Yes Yes
    United Club Infinite Card Yes Yes No Yes Yes No No
    Delta SkyMiles Reserve Amex Yes Yes Yes No Yes Yes Yes
    Bank of America Premium Rewards Yes Yes Yes Yes Yes No Yes
    Ink Business Preferred Yes Yes Yes Yes Yes Yes No

    Let’s dive into the details of each of these cards and see which one might be the best choice for you when you’re booking a trip in 2022.

    If travel insurance is one of your top priorities when it comes to a credit card, the Chase Sapphire Reserve is the best choice out there. In fact, it’s the only card that offers all seven types of coverage mentioned in the chart above. And across those categories, it offers top-of-the-line insurance and generous reimbursement caps.

    Where this card really stands out is in its trip delay coverage. If your mode of transportation is delayed for six hours or more, the coverage kicks in immediately. On many credit cards that offer this protection, the coverage doesn’t apply until your transportation is delayed for 12 hours or more — or only when it requires an overnight stay.

    So if you were supposed to fly out in the morning, but your flight gets delayed seven hours to late in the afternoon, the Chase Sapphire Reserve will cover food for you in the interim, along with your traveling spouse or domestic partner and all traveling dependents under the age of 22. That could save you quite a bit of money on expenses you weren’t planning for.

    The Chase Sapphire Reserve also shines with its emergency evacuation and transportation insurance. This benefit will cover you for up to $100,000 in medical services or transportation. Many other cards don’t even offer this protection — or cover you for a lower amount. But if you do find you need to use this coverage, call the benefits administrator immediately, as they will need to approve and coordinate your evacuation.

    And while it’s a benefit you hope you never have to use, the Sapphire Reserve will insure you for up to $1,000,000 in the case of accidental death or dismemberment. Every other card on our list that offers this coverage only insures you to up to half the amount.

    Despite the Chase Sapphire Reserve truly having it all, its $550 annual fee isn’t something to balk at. But it’s a small price to pay to get so many protections on every trip you pay for with the card. And once you take into consideration the $300 yearly travel credit, Priority Pass Select lounge access and other benefits, your net out-of-pocket cost for being a card holder is relatively low.

    Read CNN Underscored’s review of the Chase Sapphire Reserve.
    Learn more and apply for the Chase Sapphire Reserve.

    The Chase Sapphire Preferred is only a slight step down from the Chase Sapphire Reserve — it includes most of the same travel insurance protections, just not to the same extent. But the annual fee on this card is significantly lower at just $95 per year.

    Sapphire Preferred card holders get the same trip interruption and cancellation coverage as the Sapphire Reserve — up to $10,000 per person and $20,000 per trip if your trip is halted or canceled for a covered reason. You’ll be reimbursed for any prepaid, nonrefundable travel expenses, such as airfare, tours and hotels. This will even cover you if you’re sick — just make sure to get a doctor’s note.

    Other travel protections are also comparable between the two cards, but the main difference is that to be eligible for trip delay insurance with the Chase Sapphire Preferred, your flight needs to be delayed at least 12 hours — or require an overnight stay — and there’s no emergency evacuation coverage.

    Additionally, the auto rental collision damage insurance on the Chase Sapphire Preferred is primary coverage but will only cover you for up to the actual cash value of the rental car. Conversely, the maximum on the Sapphire Reserve is $75,000, which could potentially cover damage beyond the car itself in the event of an accident.

    Read CNN Underscored’s review of the Chase Sapphire Preferred.
    Learn more and apply for the Chase Sapphire Preferred.

    The travel insurance benefits on the Amex Platinum card were improved at the start of 2020, which means you’ll now have even more protection on your next vacation.

    The Amex Platinum has the same trip cancellation and interruption insurance as the Chase cards, but with one limitation — you are limited up to $10,000 per trip and a maximum limit of $20,000 per eligible card per 12 consecutive month period. This shouldn’t be a problem for most travelers, but if you find yourself canceling trips regularly, you’ll want to use a different card. Neither the Amex Platinum nor the Chase cards cover voluntary cancellations.

    You’ll also get trip delay insurance with the Amex Platinum, up to $500 per ticket, and to be eligible, your trip only has to be delayed by six hours or more. You’re limited to a maximum of two claims per card in a 12-month period, but unlike the cancellation and interruption coverage, this is a benefit you might find yourself using somewhat often — especially if you travel often.

    Where this card falls short is that its car rental insurance only provides secondary coverage, so if you have an accident, you’ll first need to file a claim with any other insurance providers — such as your own personal auto insurance company — before this insurance kicks in. It’s much easier to have a card that offers primary coverage, though having some sort of protection is better than no protection at all.

    You'll have secondary car rental coverage on your Amex Platinum card if an accident occurs.

    The Amex Platinum also carries a $695 annual fee (see rates and fees), but it comes with many luxury perks such as airport lounge access — including the very popular American Express Centurion Lounges — elite hotel status, elite car rental status, monthly Uber Cash credits, airline incidental fee credits and credits for purchases at Saks Fifth Avenue.

    Read CNN Underscored’s review of the Amex Platinum Card.
    Learn more and apply for the Amex Platinum Card.

    The United Club Infinite Card doesn’t offer as many travel protections as some of the other high-end cards on our list. But if you’re flying United and want to reap the travel benefits of using the airline’s premium credit card, you’ll still receive a number of important protections with this card.

    Trip cancellation and trip interruption insurance both come with the United Club Infinite Card, as well as primary car rental insurance. You’ll also get trip delay reimbursement coverage, although travel must be delayed at least 12 hours or require an overnight stay to apply.

    The United Club Infinite Card also offers baggage delay reimbursement, which means if your bags are delayed in getting to your final destination by six hours or more, you can be reimbursed for essential toiletries and clothing until your bags arrive, up to $100 per day. However, you can only submit a claim for the first three days with this card, while many other cards provide reimbursement for up to five days.

    Despite not covering every travel protection on the list, the United Club Infinite Card also comes with United Club membership, a $100 statement credit for Global Entry or TSA Precheck and the ability to check your first and second bag for free when flying United, and it earns 4 miles for every dollar you spend on United purchases.

    Learn more and apply for the United Club Infinite Card.

    The Delta Reserve Amex comes with the exact same travel insurance protections as the Amex Platinum card. This means you’ll have access to trip cancellation and trip interruption insurance, trip delay reimbursement, lost luggage reimbursement, secondary auto rental collision damage insurance, travel accident insurance and emergency evacuation coverage.

    If you have a medical emergency during your trip, the Delta Reserve Amex has emergency evacuation coverage.

    But, if you’re a regular Delta flyer, you may want to have the Delta Reserve Amex over the American Express Platinum for its Delta perks, especially since it carries a lower $550 annual fee (see rates and fees). In addition to the card’s travel protections, you’ll get complimentary access to Delta Sky Clubs and Amex Centurion Lounges when flying Delta, complimentary upgrades on Delta when available and your first checked bag free on Delta flights.

    Read CNN Underscored’s review of the Delta Reserve Amex.
    Learn more and apply for the Delta Reserve Amex.

    For those looking for a simple credit card that earns cash back but also comes with some basic travel insurance protections, the Bank of America Premium Rewards Credit Card could be your best option.

    Like all the other cards on our list, you’ll get trip cancellation and trip interruption insurance with the Bank of America Premium Rewards, although your coverage is significantly lower than what the other cards provide — up to $2,500 per person.

    Many other cards cover you for up to $10,000 per person, so if your trips are typically on the expensive side, you’ll probably want to pick another card. But most travelers will find the $2,500 maximum more than sufficient.

    You’ll also be covered for essentials with the card if your trip is delayed by 12 hours or more (or requires an overnight stay) and if your luggage is lost or delayed. The card also has secondary auto rental collision damage insurance and provides emergency evacuation coverage.

    And when you’re not on the road, the Bank of America Premium Rewards card earns 2 points for every dollar you spend on travel and dining, and 1 point per dollar on everything else. Points can be redeemed for cash back at a rate of 1 cent apiece, and you can even increase those rates if you have status in Bank of America’s Preferred Rewards program.

    If you’re a business traveler who wants to keep all of your expenses on your business credit card, the Ink Business Preferred has you covered. You’ll find that the coverage on the Ink Business Preferred is almost exactly the same as the Chase Sapphire Preferred, which is great for a business card that only costs $95 a year.

    Related: Get a highest-ever bonus with these Chase business credit cards.

    The main difference between the Ink Business Preferred and other Chase credit cards is that while you’re insured if your trip is involuntarily interrupted or canceled, you’ll only be reimbursed for up to $5,000 per person and up to $10,000 per covered trip. Many other cards cover double that amount, but that’s typically only necessary if you’re booking a big, lavish trip.

    Other travel insurance protections on the Ink Business Preferred include trip delay insurance, baggage delay reimbursement, lost luggage reimbursement, primary auto rental collision damage waiver and travel accident insurance, all comparable to the protections on the personal Sapphire Preferred.

    Read CNN Underscored’s review of the Ink Business Preferred.
    Learn more and apply for the Ink Business Preferred.

    Make sure you book your trip with a credit card that has travel insurance protections to cover you if disaster strikes.

    With so many credit card travel insurance protections and the many nuances to each benefit, you’ll want to first consult with your credit card company to find out the exact coverage terms on your card. You might find that you’ll only be covered if your trip is over a certain number of miles from your home or a minimum number of days away — and in some cases, even a maximum number of days.

    Some credit cards also require that you pay for the trip entirely with your credit card, while other cards allow you to just put a portion of the trip on the respective card. In some cases, the rules can even differ across protections on the same card. But if you only need to put a portion of the trip cost on your card to be covered, you could use points or miles to pay for your trip and just put the taxes on the card.

    With the coronavirus pandemic dragging into 2021, it’s likely that travel may be touch and go for at least a portion of the upcoming year, and you’ll want to be protected if you have unanticipated issues before or during your trip. So before you book your 2022 — or even 2023 — travel, make sure you know what travel insurance protections are important to you, and use a credit card that will cover you in case the worst happens.

    Looking for a new credit card? Check out CNN Underscored’s list of the best credit cards currently available.

    Get all the latest personal finance deals, news and advice at CNN Underscored Money.

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  • First Gen Z congressman-elect says he was denied DC apartment over bad credit | CNN Politics

    First Gen Z congressman-elect says he was denied DC apartment over bad credit | CNN Politics

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    CNN
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    The congressman-elect set to become the first member of Generation Z to serve in Congress said Thursday his rental application for an apartment in Washington, DC, was denied because of his “really bad” credit.

    “Just applied to an apartment in DC where I told the guy that my credit was really bad. He said I’d be fine. Got denied, lost the apartment, and the application fee. This ain’t meant for people who don’t already have money,” Maxwell Frost said in a tweet.

    Frost, an Orlando-based community organizer, made history last month when he won election in Florida’s 10th Congressional District at just 25 years old. Frost surprised party leaders with his victory in a crowded primary filled with senior political figures to replace outgoing Rep. Val Demings, before comfortably winning against his Republican opponent in a solidly blue district.

    In a Twitter thread, the congressman-elect expressed frustrations with relocating to the capital, saying that he has bad credit because he “ran up a lot of debt running for Congress for a year and a half” and that he did not make enough money working for Uber to pay for the cost of living.

    Frost said that he quit his full time job during his race’s primary, because “I knew that to win at 25 yrs old, I’d need to be a full time candidate. 7 days a week, 10-12 hours a day. It’s not sustainable or right but it’s what we had to do.”

    “As a candidate, you can’t give yourself a stipend or anything till the very end of your campaign,” he added. “So most of the run, you have no $ coming in unless you work a second job.”

    CNN has reached out to Frost’s office for comment.

    In comments to The Washington Post, Frost declined to identify the building, the size of his debt or credit score, but said the building where his application was rejected was in the city’s Navy Yard neighborhood, roughly a mile from the US Capitol. He said he lost the $50 application fee.

    Frost is not the only incoming member of Congress to have struggled to find housing in DC.

    On Twitter, he referenced New York Rep. Alexandria Ocasio-Cortez, who, in 2018 became the youngest woman elected to Congress at age 29 – and who also had a hard time as an incoming lawmaker finding affordable housing in Washington on her then-salary.

    Frost pointed out that once his congressional salary kicks in, he’ll be fine, adding that “we have to do better” for others.

    “I also recognize that I’m speaking from a point of privilege cause in 2 years time, my credit will be okay because of my new salary that starts next year,” Frost said. “We have to do better for the whole country.”

    Members of the House and Senate earn $174,000 a year, according to the Congressional Research Service, but that salary will not begin until Frost is sworn in on January 3.

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  • Biden extends student loan repayment freeze as forgiveness program is tied up in courts | CNN Politics

    Biden extends student loan repayment freeze as forgiveness program is tied up in courts | CNN Politics

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    CNN
     — 

    The Biden administration is yet again extending the pause on federal student loan payments, a benefit that began in March 2020 to help people who were struggling financially due to the Covid-19 pandemic.

    The extension comes as the Biden administration’s student loan forgiveness program is tied up in the courts. Officials had told borrowers the forgiveness program, which is worth up to $20,000 in debt relief per borrower, would be implemented before loan payments were set to resume in January.

    The payment pause will last until 60 days after the litigation is resolved. If the program has not been implemented and the litigation has not been resolved by June 30, payments will resume 60 days after that, according to the Department of Education.

    “I’m completely confident my plan is legal,” said President Joe Biden in a video posted to Twitter Tuesday, referencing his student loan forgiveness program.

    “But it isn’t fair to ask tens of millions of borrowers eligible for relief to resume their student debt payments while the courts consider the lawsuit,” he added.

    Last week, the Department of Justice asked the Supreme Court to step in and reinstate the student loan forgiveness program while the legal challenges play out. The program was struck down by a lower court judge in Texas on November 10.

    The payment pause extension gives the Supreme Court time to hear the case in its current term, Biden said.

    The administration had previously said the most recent extension until the end of December would be the last.

    Tuesday’s announcement marks the eighth time the payment restart date has been rescheduled since March 2020.

    Borrower balances have effectively been frozen since then, with no payments required on most federal student loans. During this time, interest has stopped adding up and collections on defaulted debt have also been on hold.

    The yearslong freeze on payments and interest is expected to cost the government $155 billion though the end of 2022, according to an estimate from the Committee for a Responsible Federal Budget. The new extension will add to that total.

    If Biden’s student loan forgiveness program is allowed to move forward, individual borrowers who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 annually in those years could see up to $10,000 of their federal student loan debt forgiven.

    If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness.

    This story has been updated with additional information.

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  • Biden administration notifies approved student loan relief applicants as program remains tied up in courts | CNN Politics

    Biden administration notifies approved student loan relief applicants as program remains tied up in courts | CNN Politics

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    CNN
     — 

    The Biden administration started notifying individuals who are approved for federal student loan relief on Saturday even as the future of that relief remains in limbo after lower courts blocked the program nationwide.

    The Department of Education began sending emails to borrowers who have been approved to have their federal student loans relieved, explaining that recent legal challenges have kept the administration from discharging the debt.

    “We reviewed your application and determined that you are eligible for loan relief under the Plan,” Education Secretary Miguel Cardona wrote in the e-mail, which was provided to CNN. “We have sent this approval on to your loan servicer. You do not need to take any further action.”

    “Unfortunately, a number of lawsuits have been filed challenging the program, which have blocked our ability to discharge your debt at present. We believe strongly that the lawsuits are meritless, and the Department of Justice has appealed on our behalf,” Cardona added.

    Cardona’s e-mail further explains the administration will “discharge your approved debt if and when we prevail in court” and promises to provide further updates.

    The program, which would offer up to $20,000 of debt relief to millions of qualified borrowers, remains on hold after lower courts blocked the program.

    The Biden administration has been unable to discharge any debt and stopped accepting applications due to the court rulings. About 26 million people applied for student loan relief prior to the recent court decisions with 16 million of those applications being approved, according to the Biden administration.

    “President Biden is fighting to get millions of borrowers the relief they need and deserve,” White House spokesperson Abdullah Hasan said. “Some Republican officials and special interests are blocking that from happening. We’re making clear to student borrowers who is standing with them, and who isn’t.”

    The Biden administration asked the Supreme Court on Friday to allow its student debt relief program to go into effect while the legal challenges continue to play out.

    An “erroneous injunction” from a federal appeals court, Solicitor General Elizabeth Prelogar told the Supreme Court, “leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations.”

    Government lawyers say that President Joe Biden acted in order to address the financial harms of the pandemic and “smooth the transition to repayment” in order to provide targeted debt relief to certain federal student-loan borrowers affected by the pandemic.

    The Supreme Court has asked the plaintiffs for a response by noon on Wednesday.

    The Biden administration’s request comes as the 8th Circuit Court of Appeals earlier this week issued a nationwide injunction on the program following a challenge by Republican-led states, who argue that the student loan debt relief plan violates the separations of power and the Administrative Procedure Act, a federal law that governs the process by which federal agencies issue regulations.

    This followed a ruling from a federal judge in Texas who declared the program illegal earlier this month.

    Payments on federal student loans are set to resume in January after a years-long pause due to the pandemic.

    When asked if the administration is considering extending the moratorium on student loan payments, White House press secretary Karine Jean-Pierre said the administration is “examining all options to provide middle-class families a little extra breathing room.”

    The president last extended the freeze on federal student loan payments in August when he rolled out the sweeping student debt relief plan.

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  • Everything you need to know about Biden’s student loan forgiveness program | CNN Politics

    Everything you need to know about Biden’s student loan forgiveness program | CNN Politics

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    Washington
    CNN
     — 

    President Joe Biden’s federal student loan forgiveness program, which promises to deliver up to $20,000 of debt relief for millions of borrowers, is on hold indefinitely as legal challenges work their way through the courts.

    About 26 million people had already applied by the time a federal district court judge struck down the program on November 10 – prompting the government to stop taking applications. No debt has been canceled thus far.

    The administration officially launched the application on October 17, following a brief “beta period” during which its team assessed whether tweaks were needed.

    If the courts ultimately allow the program to move forward, not every student loan borrower is eligible for the debt relief. First, only federally held student loans qualify. Private student loans are excluded.

    Second, high-income borrowers are generally excluded from receiving debt forgiveness. Individual borrowers who make less than $125,000 a year and married couples or heads of households who make less than $250,000 annually will see up to $10,000 of their federal student loan debt forgiven.

    If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness. Pell grants are awarded to millions of low-income students each year, based on factors including their family’s size and income and the cost charged by their college. These borrowers are also more likely to struggle to repay their student debt and end up in default.

    Here’s what else borrowers need to know about the new student loan forgiveness plan:

    It’s unclear when, or if, borrowers will see debt relief under Biden’s program.

    Administration officials expected to be able to grant relief before federal student loan payments are set to resume in January, when the pandemic-related pause expires. But now that timeline is in jeopardy.

    The White House has said that it has already approved 16 million applications for debt relief. The Department of Education will hold on to that information so it can quickly process those borrowers’ relief if the government prevails in court.

    If and when the program moves forward, an estimated 8 million borrowers may receive debt relief automatically because the Department of Education already has their income on file.

    If the government restarts taking applications, borrowers can apply online here: https://studentaid.gov/debt-relief/application.

    Applicants can expect to receive an email confirmation once their application is successfully submitted. Then, borrowers will be notified by their loan servicer when the debt cancellation has been applied to their account.

    Borrowers were expected to have until December 31, 2023, to submit an application.

    There are a variety of federal student loans and not all are eligible for relief. Federal Direct Loans, including subsidized loans, unsubsidized loans, parent PLUS loans and graduate PLUS loans, are eligible.

    But federal student loans that are guaranteed by the government but held by private lenders are not eligible unless the borrower applied to consolidate those loans into a Direct Loan by September 29.

    The Department of Education initially said these privately held loans, many of which were made under the former Federal Family Education Loan program and Federal Perkins Loan program, would be eligible for the one-time forgiveness action – but reversed course in September when six Republican-led states sued the Biden administration, arguing that forgiving the privately held loans would financially hurt states and student loan servicers.

    Defaulted Federal Family Education Loans and defaulted Perkins Loans are still eligible for the debt relief even if they are privately held.

    If Biden’s program is allowed to move forward, eligibility is based on a borrower’s adjusted gross income for either tax year 2020 or 2021. Adjusted gross income can be lower than your total wages because it considers tax deductions and adjustments, like contributions made to a 401(k) retirement plan.

    A taxpayer’s adjusted gross income can be found on line 11 of IRS Form 1040.

    The Department of Education says it already had income information for nearly 8 million borrowers, likely because of financial aid forms or previously submitted income-driven repayment plan applications. If the program is allowed to move forward, those borrowers will automatically receive the debt relief if they meet the income requirement, unless they choose to opt out. The department has said it will email borrowers who will be considered for debt relief but don’t need to apply.

    Millions of other borrowers will need to apply for student loan forgiveness if the Department of Education doesn’t have their income information on file. When they submit the application, borrowers are required to self-attest that their income is under the eligibility threshold. They are required to certify that the information provided is accurate upon penalty of perjury.

    The Biden administration has said that applicants who are “more likely to exceed the income cutoff” will be required to submit additional information, like a tax transcript. Officials expect that just 5% of borrowers with eligible federal student loans would not qualify due to the income threshold.

    Borrowers will not have to pay federal income tax on the student loan debt forgiven, thanks to a provision in the American Rescue Plan Act that Congress passed last year.

    But it’s possible that some borrowers may have to pay state income tax on the amount of debt forgiven. There are a handful of states that may tax discharged debt if state legislative or administrative changes are not made beforehand, according to the Tax Policy Center. The tax liability could be hundreds of dollars, depending on the state.

    Yes, some current students are eligible. Eligibility for borrowers who filed the Free Application for Federal Student Aid, known as the FAFSA, as an independent will be based on the individual’s own household income.

    Eligibility for borrowers who are enrolled as dependent students, generally those under the age of 24, will be based on parental income for either 2020 or 2021.

    Yes, if your income meets the eligibility threshold.

    Yes, if your income meets the eligibility threshold. A parent borrower with federal Parent PLUS loans for multiple children is still only eligible for up to $20,000 of loan forgiveness.

    But a parent is only eligible for up to $20,000 in debt relief if he or she received a Pell grant for his or her own education. If only the child received a Pell grant, the parent is eligible for up to $10,000 in forgiveness.

    Most borrowers can log in to Studentaid.gov to see if they received a Pell grant while enrolled in college. Information about Pell grants received is displayed on the account dashboard and on the My Aid page. This is also where borrowers can find out how much they owe and what kind of loans they have.

    Borrowers who received a Pell grant before 1994 won’t see their Pell grant information online, but they are still eligible for the $20,000 in student loan forgiveness.

    As long as borrowers received at least one Pell grant, they are eligible.

    The Biden administration has said that eligible borrowers who have received Pell grants will automatically receive the additional debt relief.

    Yes, defaulted federal student loans are eligible for debt relief.

    For borrowers who have a remaining balance on their defaulted student loans after the cancellation is applied, there will be an opportunity to get out of default once payments resume in January 2023 as part of what the Department of Education is calling its “Fresh Start” initiative.

    The Biden administration is facing several lawsuits over the student loan forgiveness program. Many of the plaintiffs argue that the Department of Education is overstepping its authority.

    In one case, a federal judge in Texas struck down the program on November 10, declaring it illegal. The Department of Justice has appealed the ruling to the 5th US Circuit Court of Appeals, but debt relief is on hold while that case plays out.

    Previously, the 8th US Circuit Court of Appeals put a temporary, administrative hold on the program on October 21, barring the administration from canceling loans covered under the policy while the court considers a challenge brought by six Republican-led states. The appeals court then granted an injunction on the program on November 14, which will remain in place until the appeals court, or the Supreme Court, issues a further order in the case.

    A lower court judge dismissed the lawsuit on October 20, ruling that the plaintiffs did not have the legal standing to bring the challenge.

    On the same day as the lower court dismissal, Supreme Court Justice Amy Coney Barrett rejected a separate challenge to Biden’s student loan forgiveness program, declining to take up an appeal brought by a Wisconsin taxpayers group.

    The Biden administration is also facing lawsuits from Arizona Attorney General Mark Brnovich and the Cato Institute, a libertarian think tank.

    Lawyers for the government say that Congress gave the secretary of education “expansive authority to alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies,” like the Covid-19 pandemic, according to a memo from the Department of Justice.

    Borrowers who have debt remaining after either $10,000 or $20,000 is wiped away could see their monthly payment amounts recalculated if they are enrolled in a standard repayment plan. Under a standard repayment plan, borrowers pay a fixed amount that ensures loans are paid off within 10 years.

    Borrowers who are already enrolled in an income-driven repayment plan are not likely to see their monthly payment amounts change due to the forgiveness, because their payments are based on household income and family size.

    Borrowers have not been required to make payments on their federal student loans since March 2020 because of the government’s pandemic-related pause. Biden has extended the pause through the end of this year, and payments will resume in January 2023.

    Along with Biden’s August announcement about canceling some federal student loan debt, he also said he would create a new plan that would make repayment more manageable for borrowers.

    There are currently several repayment plans available for federal student loan borrowers that lower monthly payments by capping them at a portion of their income.

    The new income-driven repayment plan that Biden is expected to propose would cap payments at 5% of a borrower’s discretionary income, down from 10% that is offered in most current plans, as well as reduce the amount of income that is considered discretionary. It would also forgive remaining balances after 10 years of repayment, instead of 20 years.

    Biden is also proposing that the new plan cover the borrower’s unpaid monthly interest. This could be very helpful for people whose monthly payments are so low that they don’t cover their monthly interest charge and end up seeing their balances explode, growing larger than what was originally borrowed.

    But we don’t know when these changes will take effect. The Department of Education has not provided any sense of timing, but has said it will propose a new rule to create the repayment plan. The department’s formal rule-making process usually includes soliciting public comments and can take months, if not more than a year.

    Yes. Borrowers have not been required to make payments on their federal student loans since March 13, 2020, because of the pandemic-related pause. But if borrowers did make payments, they are allowed to contact their loan servicer to request a refund.

    This story has been updated with additional information.

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  • Judge dismisses GOP states’ challenge to Biden student debt relief program | CNN Politics

    Judge dismisses GOP states’ challenge to Biden student debt relief program | CNN Politics

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    Washington
    CNN
     — 

    A federal judge rejected a lawsuit brought by six Republican-led states challenging President Joe Biden’s student debt relief program.

    US District Judge Henry Edward Autrey said Thursday he was dismissing the case because the states had not overcome the procedural threshold known as standing, which requires that plaintiffs show that a policy is causing them direct and traceable harm.

    Student loan cancellations, worth up to $20,000 per eligible borrower, could begin on Sunday.

    The states are expected to appeal the judge’s ruling, sending the case to the 8th Circuit Court of Appeals, where it is likely to face a panel of conservative judges.

    The lawsuit was filed in a federal court in Missouri last month by state attorneys general from Missouri, Arkansas, Kansas, Nebraska and South Carolina, as well as legal representatives from Iowa.

    The states had argued in court documents that the Biden administration does not have the legal authority to grant broad student loan forgiveness, as well as that the program would hurt them financially.

    Lawyers for the government have argued that Congress gave the education secretary the power to discharge debt in a 2003 law known as the HEROES Act. They also argue that the plaintiffs don’t have standing to ask for an injunction.

    In another victory for Biden, Supreme Court Justice Amy Coney Barrett rejected a separate challenge to the administration’s student loan forgiveness program on Thursday, declining to take up an appeal brought by a Wisconsin taxpayers group.

    The Biden administration faces other lawsuits from Arizona Republican Attorney General Mark Brnovich, and conservative groups such as the Job Creators Network Foundation and the Cato Institute.

    But the legal challenge filed by six states that was dismissed Thursday was widely seen as the most formidable. It was the “most plausible legal challenge to the Biden Jubilee,” said Luke Herrine, an assistant law professor at the University of Alabama who previously worked on a legal strategy pushing for student debt cancellation, in a tweet Thursday.

    Biden’s student loan forgiveness program, first announced in August, aims to deliver debt relief to millions of borrowers before federal student loan payments resume in January after a nearly three-year, pandemic-related pause.

    While the application officially opened on Monday, the Biden administration has agreed in court documents to hold off on canceling any debt until October 23. Once processing begins, most qualifying borrowers are expected to receive debt relief within weeks.

    Under Biden’s plan, eligible individual borrowers who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 annually in those years will see up to $10,000 of their federal student loan debt forgiven.

    If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness.

    This story has been updated with additional information.

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  • Biden’s student loan forgiveness application is coming soon. Here’s what you need to know | CNN Politics

    Biden’s student loan forgiveness application is coming soon. Here’s what you need to know | CNN Politics

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    Washington
    CNN
     — 

    The application for President Joe Biden’s student loan forgiveness plan is expected to go live as soon as this week.

    Announced in late August, the plan will deliver federal student loan forgiveness to millions of low- and middle-income borrowers.

    Individuals who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 annually in those years will see up to $10,000 of their federal student loan debt forgiven.

    If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness.

    In addition to federal Direct Loans used to pay for an undergraduate degree, federal PLUS loans borrowed by graduate students and parents may also be eligible if the borrower meets the income requirements.

    Facing mounting legal challenges to the student loan forgiveness policy, the Biden administration announced some last-minute changes to the program last week. Borrowers are still awaiting final details on the policy.

    The Department of Education regularly updates the Federal Student Aid website with information on the forgiveness program.

    Here’s what we know so far:

    The application has not been released yet but the Biden administration has said it will come out sometime in October.

    The online application will be short, according to the Department of Education. Borrowers won’t need to upload any supporting documents or use their Federal Student Aid ID to submit the application.

    “Once you submit your application, we’ll review it, determine your eligibility for debt relief and work with your loan servicer(s) to process your relief. We’ll contact you if we need any additional information from you,” the department said an email to borrowers last week.

    Borrowers will have more than a year to apply. The deadline will be December 2023.

    To be notified when the process has officially opened, sign up at the Department of Education subscription page.

    About 8 million people are expected to receive student loan forgiveness automatically because the Department of Education already knows what their income is, likely due to previously submitted financial aid forms or income-driven repayment plan applications.

    It’s unclear when exactly debts will be discharged. But due to ongoing lawsuits, the government has agreed in court to hold off canceling any federal student loan debt before October 17.

    The Biden administration scaled back eligibility for the program last week, as it faces mounting legal challenges to the policy.

    The program will now exclude borrowers whose federal student loans are guaranteed by the government but held by private lenders. The administration has said the change could affect about 700,000 people.

    The Department of Education initially said these loans, many of which were made under the former Federal Family Education Loan program and Federal Perkins Loan program, would be eligible for the one-time forgiveness action as long as the borrower consolidated his or her debt into the federal Direct Loan program.

    But the agency has reversed course after six Republican-led states sued the Biden administration, arguing that forgiving the privately held loans would financially hurt states and student loan servicers.

    Now, privately held federal student loans must have been consolidated before September 29 in order to be eligible for the debt relief.

    The White House clarified last week that borrowers will be able to opt out if they don’t want to receive the debt forgiveness.

    The Biden administration’s announcement came hours after a borrower sued, arguing that he would be forced to pay state taxes on the amount canceled – an expense he would otherwise avoid.

    There are a handful of states that may tax the debt discharged under Biden’s plan if state legislative or administrative changes are not made beforehand, according to the Tax Foundation.

    There are currently at least three significant lawsuits aiming to block the Biden administration from implementing its student loan forgiveness plan.

    Republican states are leading the charge. In addition to the lawsuit filed by six Republican-led states that say they could be hurt financially by the forgiveness plan, Arizona Attorney General Mark Brnovich also filed a lawsuit last week.

    Brnovich, a Republican, argues that the policy could reduce Arizona’s tax revenue because the state code doesn’t consider the loan forgiveness as taxable income, according to the lawsuit. The complaint also argues that the forgiveness policy will hurt the attorney general office’s ability to recruit employees. Currently its employees may be eligible for the federal Public Service Loan Forgiveness program, but some potential job candidates may not view that as a benefit if their student loan debt is already canceled, the lawsuit argues.

    A federal judge has already denied the request in the third lawsuit – from a borrower who sued arguing that they would incur a bigger state tax bill due to the loan forgiveness. The plaintiff, a public interest lawyer at the Pacific Legal Foundation, has until October 10 to file a revamped lawsuit.

    The nonpartisan Congressional Budget Office said in a report released last week that the student loan cancellation could come at a price of $400 billion but noted that those estimates are still “highly uncertain.”

    The Biden administration argues that the CBO’s cost estimate should be viewed over a 30-year time period and came out with its own analysis two days later. It said the program will cost an average of $30 billion per year over the next decade and $379 billion over the course of the program.

    The Department of Education is warning borrowers of scams related to the student loan forgiveness program that ask for payment in return for help getting debt relief.

    “Make sure you work only with the US Department of Education and our loan servicers, and never reveal your personal information or account password to anyone,” it said in an email to borrowers.

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  • Biden’s student loan forgiveness program faces a new threat from Senate Republicans | CNN Politics

    Biden’s student loan forgiveness program faces a new threat from Senate Republicans | CNN Politics

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    Washington
    CNN
     — 

    President Joe Biden’s student loan forgiveness program may face a new threat from Senate Republicans even before the US Supreme Court rules on whether it can be implemented.

    Republican Sens. Bill Cassidy of Louisiana, Joni Ernst of Iowa and John Cornyn of Texas are planning to introduce a resolution to overturn Biden’s debt relief program, which promises up to $20,000 of debt relief for eligible borrowers, as soon as this week.

    Biden would very likely veto the measure if it succeeds in both the Senate and House. But votes would force members of his own party, who have not all been in support of the student loan forgiveness program, to take a public stance.

    The program is currently blocked. The Supreme Court is expected to issue its ruling in late June or early July.

    “President Biden’s student loan scheme does not ‘forgive’ debt, it just transfers the burden from those who willingly took out loans to those who never went to college, or sacrificed to pay their loans off,” Cassidy said in a statement.

    The Republican senators plan to introduce their resolution using the Congressional Review Act, which allows Congress to roll back regulations from the executive branch without needing to clear the 60-vote threshold in the Senate that is necessary for most legislation.

    It was unclear whether the Congressional Review Act would apply to Biden’s student loan forgiveness program until the Government Accountability Office made a determination on the matter earlier this month.

    Biden issued his first veto last week concerning a retirement investment resolution, which was also brought under the Congressional Review Act.

    While many key Democratic lawmakers have urged Biden to cancel some federal student loan debt, not every member of the party has been supportive.

    Sen. Catherine Cortez Masto, a Democrat from Nevada who won a competitive reelection race last year, has previously been critical of Biden’s forgiveness plan.

    “I’ll review the full text of the CRA when it is released, but like I said before, I disagree with President Biden’s executive action on student loans because it doesn’t address the root problems that make college unaffordable,” she said in a statement sent to CNN.

    Her statement was first reported by The Wall Street Journal.

    Democratic Sen. Joe Manchin of West Virginia has previously called Biden’s student loan forgiveness program “excessive.” His office did not respond to a request for comment for this story.

    Biden’s one-time student debt forgiveness program is estimated to cost $400 billion over time.

    Individual borrowers who made less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 a year could see up to $10,000 of their federal student loan debt forgiven.

    If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness. Pell grants are awarded to students from very low-income families who are more likely to struggle paying back their student loans.

    While the debt relief would help borrowers with student loans now, the program wouldn’t change the cost of college in the future – and some critics argue that it could even lead to an increase in tuition. A separate proposal from Biden, expected to take effect later this year, would create a new income-driven repayment plan that could lower monthly payments for both current and future borrowers.

    The legal challengers to the student loan forgiveness program argue that the Biden administration is abusing its power and using the Covid-19 pandemic as a pretext for fulfilling the president’s campaign pledge to cancel student debt.

    The White House has said that it received 26 million applications before a lower court in Texas put a nationwide block on the program in November, and that 16 million of those applications have been approved for relief – though no debt has been canceled yet. It’s possible the government moves quickly to forgive those debts if it gets the green light from the Supreme Court.

    If the justices strike down Biden’s student loan forgiveness program, it could be possible for the administration to make some modifications to the policy and try again – though that process could take months.

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  • House passes bill to block Biden’s student loan forgiveness program | CNN Politics

    House passes bill to block Biden’s student loan forgiveness program | CNN Politics

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    Washington
    CNN
     — 

    The Biden administration’s one-time student loan forgiveness program is facing a fresh threat from House Republicans while it awaits a ruling from the Supreme Court about whether the proposal can take effect.

    The House voted Wednesday to pass a resolution seeking to block the forgiveness program as well as end the pandemic-related pause on federal student loan payments.

    Two Democrats, Rep. Jared Golden of Maine and Rep. Marie Gluesenkamp Perez of Washington, joined Republicans in voting for the bill.

    The proposed forgiveness program, which promises up to $20,000 in federal student debt relief to millions of low- and middle-income borrowers, was halted by lower courts late last year before any student debt was canceled. The pause on payments, which has been in place since March 2020, is set to end later this year.

    President Joe Biden has pledged to veto the Republican-led resolution if it passes in both the House and Senate. The administration said that the resolution would “weaken America’s middle class.”

    “The president’s plan is a good one. It’s a popular one. And it will help prevent borrowers from default when loan payments restart this summer,” said White House press secretary Karine Jean-Pierre earlier Wednesday.

    But Republicans argue that the student loan forgiveness program is unlawful and shifts the cost of the debt to taxpayers who chose not to go to college or already paid off their student loans. Blocking the program could reduce the deficit by nearly $320 billion, according to the Congressional Budget Office.

    “President Biden’s so-called student loan forgiveness programs do not make the debt go away, but merely transfer the costs from student loan borrowers onto taxpayers to the tune of hundreds of billions of dollars,” said Rep. Bob Good, a Republican from Virginia, in a statement released when he introduced the resolution in March.

    Even though Biden has pledged to veto the bill, votes in the House and Senate could force more moderate members of the Democratic Party to take a public stance regarding the student loan forgiveness program. Some lawmakers have been critical of the proposal in the past.

    The Senate has yet to schedule a vote on the resolution, but nearly all of the 49 Republican senators have signed on as sponsors.

    Republican lawmakers introduced their joint resolution in late March, using the Congressional Review Act, which allows Congress to roll back regulations from the executive branch without needing to clear the 60-vote threshold in the Senate that is necessary for most legislation.

    If the student loan forgiveness program is allowed to move forward, individual borrowers who made less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 a year could see up to $10,000 of their federal student loan debt forgiven.

    If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness.

    While the debt relief would help borrowers with student loans now, the program wouldn’t change the cost of college in the future – and some critics argue that it could even lead to an increase in tuition.

    In February, the Supreme Court heard two legal challenges to Biden’s student loan forgiveness program. One was filed by six Republican-led states, and the other was brought by two student loan borrowers who did not qualify for the full benefits of the program. The individuals are backed by the Job Creators Network Foundation, a conservative organization.

    The lawsuits argue that the Biden administration is abusing its power and using the Covid-19 pandemic as a pretext for fulfilling the president’s campaign pledge to cancel student debt.

    The White House has said that it received 26 million applications before a lower court in Texas put a nationwide block on the program in November, and that 16 million of those applications have been approved for relief.

    No debt has been canceled yet. But if the Supreme Court allows the program to take effect, it’s possible the government moves quickly to forgive those debts.

    If the justices strike down Biden’s student loan forgiveness program, it could be possible for the administration to make some modifications to the policy and try again – though that process could take months.

    The Supreme Court is expected to issue its ruling in late June or early July.

    Biden has extended the pause on federal student loan payments several times. Accounts have been frozen and most federal borrowers have not been required to make a payment for more than three years.

    But the pause is set to end later this year. The Biden administration has tied the restart date to the litigation over the separate student loan forgiveness program. Payments are set to resume 60 days after the Supreme Court issues its ruling or 60 days after June 30, whichever comes first.

    But the Biden administration has also made some lesser-known but potentially longer-lasting changes to the federal student loan system.

    New rules set to take effect in July could broaden eligibility for the Public Service Loan Forgiveness program, which is aimed at helping government and nonprofit workers. And a new income-driven repayment plan proposal is meant to lower eligible borrowers’ monthly payments and reduce the amount they pay back over time. Parts of that new repayment plan are expected to go into effect later this year.

    The Department of Education has also made it easier for borrowers who were misled by their for-profit college to apply for student loan forgiveness under a program known as borrower defense to repayment, as well as for those who are permanently disabled.

    Altogether, the Biden administration has approved more than $66 billion in targeted loan relief to nearly 2.2 million borrowers.

    This headline and story have been updated with additional information.

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  • Biden’s student loan forgiveness program was rejected by the Supreme Court. Here’s what borrowers need to know | CNN Politics

    Biden’s student loan forgiveness program was rejected by the Supreme Court. Here’s what borrowers need to know | CNN Politics

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    Washington
    CNN
     — 

    The Supreme Court struck down President Joe Biden’s student loan forgiveness program Friday, blocking millions of borrowers from receiving up to $20,000 in federal student debt relief, just months before student loan payments are set to restart after a yearslong pause.

    Biden had announced the student loan forgiveness program last August, but it never took effect, having been tied up in the courts for months.

    Later Friday, the president announced that his administration will pursue another pathway to providing some student debt relief, which is based on a different law than the one the now-defunct student loan forgiveness program was linked to.

    This pathway requires the Department of Education to undertake a formal rule-making process, which typically takes months. Details were not released Friday on who might benefit if that process is successful.

    Biden also announced that the administration will take steps to ease the transition period for borrowers when monthly student loan repayments resume in October. This “on-ramp” period will help borrowers avoid penalties if they miss a payment during the first 12 months.

    The Biden administration has made it easier for many borrowers to seek federal student loan forgiveness from several existing debt cancellation programs.

    New rules set to take effect in July could broaden eligibility for the Public Service Loan Forgiveness program, which is aimed at helping government and nonprofit workers.

    And a new income-driven repayment plan proposal is meant to lower eligible borrowers’ monthly payments and reduce the amount they pay back over time. The administration said this plan was finalized Friday and borrowers will be able to take advantage of it this summer, before loan payments are due.

    The Department of Education has also made it easier for borrowers who were misled by their for-profit college to apply for student loan forgiveness under a program known as borrower defense to repayment, as well as for those who are permanently disabled.

    Altogether, the Biden administration has approved more than $66 billion in targeted loan relief to nearly 2.2 million borrowers.

    Regardless of the way the Supreme Court ruled on the one-time forgiveness program, the Biden administration had said that student loan payments will be due starting in October.

    Most student loan borrowers have not been required to make payments on their federal student loans since March 2020, when Congress passed a sweeping aid program to help people struggling financially because of the Covid-19 pandemic.

    Since then, the pause has been extended eight times – under both the Trump and Biden administrations.

    A law passed in early June that addresses the debt ceiling prohibits another extension of the pause.

    But the Biden administration said Friday that it will provide a 12-month on-ramp period for borrowers reentering payment.

    “Borrowers who can make payments should do so as payments will resume and interest will accrue,” Education Secretary Miguel Cardona said in a statement.

    “But the on-ramp to repayment will help borrowers avoid the harshest consequences of missed, partial, or late payments like negative credit reports and having loans referred to collection agencies,” he added.

    Borrowers will not be reported to credit bureaus, be considered in default or referred to collection agencies for late, missed or partial payments during the on-ramp period, according to a fact sheet from the White House.

    Student loan experts recommend that borrowers reach out to their student loan servicer with any questions about their loans as soon as possible.

    After such a long pause, many borrowers may be confused about how much they owe, when to pay and how. Millions of borrowers will have a different servicer handling their student loans since the last time they made a payment.

    Borrowers should also reach out to their servicer if they are worried they will not be able to afford their monthly payment. They may be eligible for an income-driven repayment plan, which set payments based on income and family size, but require borrowers to submit some paperwork.

    Federal student loan borrowers can check the FSA website for updates on resuming payments.

    Borrowers will also have to reauthorize the automatic debit from their accounts to pay their monthly loan bill even if they authorized the withdrawals before the pause began.

    The National Association of Student Financial Aid Administrators warns that borrowers may need to have patience when contacting their student loan servicer, which might be overwhelmed with a high volume of inquiries at this time.

    “It is possible you may not reach your servicer via phone the first time you call, and you may need to call a few times before getting connected,” the group says.

    No debt had been canceled, even though the Biden administration had received about 26 million applications for relief last year and approved 16 million of them.

    The forgiveness program, estimated to cost $400 billion, would have fulfilled a campaign promise of Biden’s to cancel some student loan debt. But a group of Republican-led states and other conservative groups took the administration to court over the program, claiming that the executive branch does not have the power to so broadly cancel student debt in the proposed manner.

    Critics also point out that the one-time student loan forgiveness program does nothing to address the cost of college for future students and could even lead to an increase in tuition. Some Democrats joined Republicans in voting for a bill to block the program. Both the Senate and the House passed the measure, but Biden vetoed the bill in early June.

    Under Biden’s student loan forgiveness proposal, individual borrowers who made less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 a year would have seen up to $10,000 of their federal student loan debt forgiven.

    If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual would have been eligible for up to $20,000 of debt forgiveness.

    Pell grants are awarded to millions of low-income students each year, based on factors including their family’s size and income and the cost charged by their college. These borrowers are also more likely to struggle to repay their student debt and end up in default.

    The administration estimated that roughly 20 million borrowers would have seen their entire federal student loan balance wiped away.

    An independent analysis from the Penn Wharton Budget Model found that about two-thirds of the student debt cancellation would have gone to households making $88,000 a year or less.

    This story has been updated with additional information.

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  • Biden has already canceled $66 billion in student loans. Here’s how 3 people received debt relief | CNN Politics

    Biden has already canceled $66 billion in student loans. Here’s how 3 people received debt relief | CNN Politics

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    Washington
    CNN
     — 

    Even though the Supreme Court struck down President Joe Biden’s student loan forgiveness program, more debt will be canceled during his time in office than under any other president.

    The Biden administration has already canceled a record $66 billion in student loan debt for nearly 2.2 million borrowers.

    While his one-time student loan forgiveness program would have been far reaching, promising up to $20,000 of debt cancellation for eligible borrowers and wiping out roughly $400 billion overall, the Department of Education has made some lesser-known changes to existing student loan forgiveness programs.

    The administration has made it easier for people to qualify for the Public Service Loan Forgiveness program, which grants relief for public sector workers after they’ve made 10 years of qualifying payments.

    It has also made more people eligible for the borrower defense to repayment program that cancels student loan debt for borrowers who attended a school that may have misled them or violated certain state laws, as well as made loan discharges automatic for more borrowers who are permanently disabled.

    Here’s how three people received student loan forgiveness due to the changes the Biden administration has made to existing federal programs.

    Margo Myles, 52, got a letter from the Department of Education in late March saying that nearly $25,000 of her federal student loan debt had been canceled.

    Myles had borrowed the money in the early 2000s to earn an associate degree in paralegal studies, but the education didn’t pay off. She found work in the legal field a few years after finishing school but was earning just $9 an hour – not enough to pay her bills and her student loans.

    “I was trying to reorganize my life. For me, and for so many other students, this should have been a door,” Myles said of her degree program.

    Instead, she defaulted on her student loans. The default dinged her credit and resulted in the garnishment of her federal tax refunds. Myles said she wasn’t allowed to request her academic transcript while her loans were in default, preventing her from enrolling elsewhere.

    The Department of Education later found that schools owned by the now-defunct Corinthian Colleges – which include Myles’ alma mater, known at the time as Florida Metropolitan University – engaged in “widespread and pervasive misrepresentations” about students’ employment prospects, including guarantees they would find a job as well as the ability to transfer credits.

    Under the borrower defense program, borrowers can apply for debt relief if they were misled by their college. Last June, the Department of Education announced that any student who attended a Corinthian-owned college would automatically qualify for the benefit. The move made 560,000 more borrowers eligible.

    About nine months later, Myles learned that she was one of the qualifying borrowers and her debt was discharged. The Department of Education said it would request credit reporting agencies to repair her credit within 45 days, according to the letter she received.

    Myles, who now lives in Cheyenne, Wyoming, and works in insurance, plans to continue her education by pursuing a bachelor’s degree and then a law degree.

    “I’ve always wanted to go back to school. I don’t care if I’m 60 when I finish,” she said.

    Paige Vass recently qualified for the Public Service Loan Forgiveness program.

    Applying for the Public Service Loan Forgiveness program was a yearslong, frustrating process for Paige Vass, a special education teacher in Virginia.

    The PSLF program cancels remaining federal student loan debt for eligible government and nonprofit workers after they have made 120 qualifying monthly payments, which takes at least 10 years.

    But the program has been riddled with problems. Many people reached 10 years of repayment believing they qualified for cancellation of their remaining debt, but instead found out that they had the wrong kind of loan or were making payments in the wrong kind of repayment plan.

    Vass applied after teaching for more than 10 years, but her paperwork was returned several times, for things like having an incorrect date or a signature in the wrong place.

    She decided to try applying one more time last year after the Biden administration temporarily expanded eligibility for the program with a one-year waiver.

    “My fingers were crossed, but I also thought I might be chasing a unicorn,” Vass, 47, said.

    “But I was like, I’ve got to try. This is a huge debt and a huge weight on our family,” she added. She and her husband, who is also an educator, have two children.

    This spring, not only did Vass find out that she qualified for more than $30,000 in debt relief, but she is also set to receive a refund of about $5,000 because she had overpaid. Under the rules of the temporary waiver, she had made more payments than the 120 required for debt forgiveness.

    The debt relief means she may be able to spend more time with her kids. In the past, when she’s owed hundreds of dollars for her student debt each month, she’s worked summer school, taught skiing and worked for the on-demand delivery company DoorDash for some extra cash.

    “There’s been so many changes and so many hardships for teachers over the last three years. To me (the loan forgiveness) felt like a statement on behalf of our country’s administration that says, ‘You are valuable and we appreciate what you do, and you do make a difference,’” Vass said.

    Charles Goldenberg saw more than $340,000 of his debt canceled.

    Last year, Charles Goldenberg, a radiologist in New York City, got an email notifying him that his more than $340,000 in federal student loan debt had been canceled because he qualified for the PSLF program.

    While in training, and making little money, Goldenberg was paying off his loans through an income-driven repayment plan, which lowered his monthly payments. But those payments hardly covered the interest accumulation, and his balance ballooned before the pandemic pause went into effect in 2020.

    Now, at 42, Goldenberg said the student debt cancellation gives him the opportunity to move on with his life.

    “And I think that’s the whole point of the PSLF program. You spend years of training and schooling above and beyond college, making less money than you would when you’re out of training. It’s not without sacrifice. It’s because you work for eligible employers … where you’re not going to be making the kind of money that I make now,” he added.

    Goldenberg had been paying off some his loans for 19 years, but not every payment had counted toward the PSLF program until he consolidated his loans about two years ago.

    Thanks to the one-year waiver put in place by the Biden administration, some payments he made earlier became eligible.

    Applying for the relief had also been a long process for Goldenberg. His loan servicer had difficulty verifying that one of his employers, a nonprofit hospital in Miami, qualified for the program. He eventually found proof on the Department of Education’s website that the hospital did qualify.

    Now that Goldenberg is done with training and is earning more money, his student loan payments would be much higher when the pandemic-related pause ends later this year than they were three years ago. He expects they would be $2,500 or more a month if not for the debt relief.

    “Now I can use the money that I make for myself, for a mortgage, for family, for other expenses, for retirement. So it really opened up my financial future in a big way,” he said.

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