Higher Ed Policy Roundup: Vol. 6 - Issue 24

This week, the Office of Federal Student Aid made several significant updates to its Student Loan Debt Relief Frequently Asked Questions (FAQ) website. First, it provided information for borrowers who wish to opt out of student loan forgiveness. The FAQs clarified that borrowers who do not wish to participate in the nationwide forgiveness will be given the opportunity to do so. This comes after a lawsuit was filed against the Education Department (ED) arguing that loan forgiveness would have a negative impact as canceled student loans are treated as taxable income in some states. An online form will be available by early October to apply for forgiveness, and borrowers will have until December 31, 2023 to complete the application.
Second, the FAQs were updated to inform borrowers with Federal Family Education Loan (FFEL) program loans, that are not held by ED, that they will not be able to consolidate their loans after September 29, 2022 in order to receive forgiveness. POLITICO is reporting that ED made this change because it is worried that it could be sued by FFEL holders, guaranty agencies, servicers or other stakeholders. 
The Congressional Budget Office (CBO) published data projecting the cost of the Biden-Harris Administration’s student loan forgiveness plan and student loan pause extension. According to the data, CBO estimates that $430 billion in student loans will be canceled and that the student loan pause extension will cost an additional $20 billion. Also this week, the Federal Reserve Bank of New York estimated the debt cancelation will cost about $441 billion and would eliminate federally-held balances for around 40 percent of all federal borrowers.
 

President Biden’s student loan forgiveness plan is facing two separate legal challenges – one from a legal advocacy group and another from six Republican-led states.
Slate published an opinion piece on why the new legal attack on President Biden’s student loan relief plan may already be doomed.
 

There were no relevant student-aid related bills recently introduced for consideration by the 117th Congress (2021-2022).