The U.S. Department of Education is not ready for student loan forgiveness — a top lawmaker says — and the results could be a disaster for student loan borrowers.
Here’s what you need to know — and what it means for your student loans.
Are President Joe Biden and the U.S. Department of Education ready to enact wide-scale student loan forgiveness? “We are prepared, we’re ready to roll up our sleeves… we’ve been working nonstop,” Education Secretary Miguel Cardona told Politico last week. However, Rep. Virginia Foxx (R-NC), who is the top Republican on the House Committee on Education and Labor, expressed serious doubts. According to her new letter to Cardona, Foxx is deeply concerned about the Education Department’s level of preparedness for wide-scale student loan forgiveness. Among her concerns:
- Biden nor the Education Department have the legal authority to enact wide-scale student loan cancellation;
- The Education Department has a history of being unprepared to execute new plans, such as Operation Fresh Start and the Public Service Loan Forgiveness Waiver; and
- Student loan borrowers will be harmed as a result.
“I remind you that acting is not just releasing a press statement: action is a comprehensive, smooth operation that follows careful planning and thoughtful consideration about all aspects of an initiative, from communications to implementation,” Foxx wrote. “I am gravely concerned the Department will further harm borrowers and taxpayers if it acts on student loan forgiveness, in part because of its inability to follow through on its grandiose proposals.”
Student loan forgiveness: 7 questions
In her letter, Foxx poses seven questions to Cardona about student loan forgiveness. Specifically, Foxx wants to ensure that the implementation of any student loan forgiveness won’t hurt student loan borrowers. Essentially, the questions include:
- What is the plan for student loan forgiveness?
- Are student loan servicers aware of your plan for student loan forgiveness? Have you established protocols for answering questions and providing information to student loan borrowers?
- Have you approved the communications that will be sent to student loan borrowers?
- If there is an income cap or other means test, how will you ensure that student loan borrowers submit accurate information?
- What is the timeline to implement student loan forgiveness?
- How does student loan forgiveness impact the end of temporary student loan relief and the restart of regular student loan payments?
- Will future student loan borrowers be told that they won’t get the same student loan forgiveness?
Student loans: next steps
Foxx is among a growing chorus of legislators from both parties who have challenged Biden on wide-scale student loan forgiveness. Like other Republicans, Foxx has long opposed broad student loan forgiveness and extensions of temporary student loan relief. Biden has canceled $25 billion of student loans, but he hasn’t decided whether he will cancel student loans for most or all student loan borrowers. Foxx’s most recent letter, however, doesn’t simply critcize student loan forgiveness as bad policy. Rather, Foxx challenges the Education Department on the details of its plan for student loan forgiveness, particularly with respect to implementation. Approving student loan forgiveness is one thing; implementing it successfully for vulnerable student loan borrowers is another. If Biden proceeds with wide-scale student loan forgiveness, he will also need to address the restart of student loan payments beginning September 1. Biden could delay an announcement on student loan forgiveness until later this summer. However, with the end of temporary student loan relief only months away, it’s critical for all student loan borrowers to prepare now. Here are some smart ways to save money on your student loans and pay off student debt faster:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)