Inside the Biden administration’s plan to restart student loan payments
THE BIDEN WEIGHTS TEAM HOW TO RESTART STUDENT LOAN PAYMENTS: The Biden administration is making plans for how it will resume collecting federal student loans early next year, when the pandemic-related government hiatus on monthly payments for tens of millions of Americans ends .
– The education service studies proposals which would give borrowers more flexibility, as they face student loan bills for the first time in nearly two years. The plans, which are not yet finalized, aim to avoid an increase in delinquencies when payments resume in February.
– Key context: The government’s $ 1.6 trillion student loan apparatus has been largely frozen since March 2020, and reactivating it will be an unprecedented logistical challenge. It will also be fraught with political pitfalls as progressives urge the administration to rather concentrate on radical debt cancellation.
– Internal documents obtained by POLITICO under a freedom of information law request describe the details of the department’s “return to reimbursement” strategy, internally referred to as “R2R”. Several people familiar with ministry planning also described other policies that are under consideration by the administration.
Here’s a look at what’s on the table when payments resume in about three months:
– Grace period : Ministry officials have asked lending services to create a “safety net” for borrowers for the first three months after their first payment is due next year, according to internal documents. Borrowers who miss a payment during this initial 90 day period will not be affected by their credit reports. Instead, these borrowers will automatically be forborne and will always be considered up to date on their loans.
– Targeted reach: The department is plan direct contacts with certain groups of “at risk” borrowers, like those who were delinquent before the pandemic, never graduated from college or only recently started repaying their loans.
– Reinforced customer service: The department has increased the hours of call center operations for its loan officers, in anticipation of a deluge of requests and questions from borrowers.
– Easier reimbursement based on income: Officials are also discussing ways to make it easier for borrowers to enroll borrowers for income-based repayment programs, which typically require borrowers to submit proof of their income and family size each year. The education ministry plans to allow borrowers, for a limited time, to quickly self-certify their income and family size over the phone with their loan officer, according to people familiar with the plan.
– A new start’? Education Department officials are also considering a plan to automatically remove more than 7 million borrowers from defaulting on their federal student loans. The effort to help these borrowers, which has not been finalized, is internally called “Operation Fresh Start,” according to people familiar with the ministry’s planning.
A group of Senate Democrats, led by Sens. Elizabeth warren and Raphael Warnock, earlier this year appeals to the Biden administration remove defaults on all student loans held by the federal government.
– “A smooth transition to reimbursement is a high priority for the administration,” said an administration official in response to POLITICO’s request for comment. “Over the next few months, we’ll be releasing more details on our plans and engaging directly with federal student loan borrowers to make sure they have the resources they need.”
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BIDEN DOUBTS DEMOCRATS CAN GO TO COMMUNITY COLLEGE FOR FREE: President Joe Biden expresses doubt that his plan for a tuition-free community college will be included in the final economic and social policy bill to carry out his domestic policy agenda. Democratic leaders and the White House are trying to find a way to downsize the entire bill in order to win the votes of the more conservative members of their caucus.
– “I don’t know if I can do it” Biden spoke about his free community college proposal during a speech on his Connecticut “Build Back Better” program on Friday.
– Biden then clarified to reporters: “I doubt we’ll get the full funding for community colleges, but I’m not going to give up on community colleges while I’m president.”
Biden’s original proposal called for a new program, costing $ 109 billion over 10 years, to eliminate community college tuition fees across the country. The House Democrats’ proposal calls for a five-year program at an estimated cost of $ 45.5 billion.
– Education Secretary Miguel Cardona said in an interview broadcast on Sunday that he doesn’t recommend any of the education proposals to the chopping block, as Democratic leaders look for ways to cut down to $ 1 trillion from their original $ 3.5 trillion plan.
“For far too long, one could predict which students would or would not succeed depending on location and race. The educational program is an honest approach to level the playing field and uplift our country,” Cardona said in an interview with Axios on HBO. “I know there are a lot of conversations on the Hill.
– Cardona distinguished the free community college plan. “For me it is extremely important that we provide a community college for all, ”he said in the interview, describing it as an economic imperative.
THE LOAN FORGIVENESS BLITZ BEGINS: On Friday, the Education Department began advising some borrowers from the long-struggling civil service loan forgiveness program that they are now months or years closer to having their debts written off, by because of the sweeping changes the Biden administration made to the program earlier this month.
– “Elections matter!” »Cardona tweeted over the weekend, as some borrowers posted screenshots of emails they received.
– No data yet: The Ministry of Education’s mine of online statistics on the PSLF program has not been updated in almost six months.
PANEL TO TACKLE THE EXPANSION OF PELL GRANTS FOR INCARCED STUDENTS: A Department of Education regulatory subcommittee will meet this week to discuss the Biden administration’s proposal to implement the extension of Pell Grants to incarcerated students that Congress passed last December. The bipartisan agreement has been included as part of a host of higher education policies that have joined year-end government funding and Covid relief legislation.
– Quality control: Congress extended the Pell Grants only to incarcerated students attending prison education programs that federal or state correctional authorities approve as operating in “the best interests of the students.” Now the Ministry of Education will have to define this expression.
The Biden administration departure proposal judge education programs in prison based in part on the salaries and placement rates of their graduates, compared to students without a university degree or other formerly incarcerated students who did not take the courses in prison .
– Also on the program: The subcommittee will also discuss how the accreditation rules apply to education programs in prison and what types of consumer disclosures would be useful for incarcerated students. And they will debate how to prevent Pell Grants from funding prison education programs in areas in which incarcerated students would ultimately not be able to obtain a professional license due to their criminal conviction.
– The process: The subcommittee will meet virtually this week and again in November. All proposals will ultimately be voted on by the full rulemaking committee, which is also considering a series of changes to federal student loan policies.
– The for-profit chain Vista College abruptly closes its doors and files for bankruptcy: Higher education route.
– How West Virginia established the Universal Pre-K: The New York Times.
– Covid-19 precautions cause backlash on college campuses: The Wall Street Journal.
– The University of Southern California will award honorary degrees to displaced Japanese students: The New York Times.