On Monday, the U.S. Department of Education expanded the student loan relief program, which would cancel up to $20,000 in debts for millions of borrowers through a new set of rules aiming to reduce the total sums owned by borrowers.
With more than 22 million Americans currently having already applied to the program since the application opened on Oct. 15, the new adjustments will principally focus on reversing the rules concerning student loan policies that have been made during the former President Donald Trump administration, according to a Monday New York Times article.
The new regulations will eliminate the majority of interest capitalizations, or the cumulative sum of the unpaid interests, lowering the overall borrowing costs for borrowers, according to the news release.
The new adjustments will go into effect July 1, 2023, according to a Monday Department of Education news release.
The updated regulations will also establish a framework for borrowers to raise a defense to repayment in case their institutions misled or manipulated them and it will apply to all claims pending on or received on or after July 1, 2023, according to the same news release.
Although the updated regulations are an important step toward the improvement of the student loan system, the most recent court decision temporarily blocked the program.
On Oct. 21, the 8th U.S. Circuit Court of Appeals sided with six Republican-led states, which
sued to block President Joe Biden’s student debt forgiveness plan.
James Brent, San Jose State political science professor, said when that case was first brought to the lower court and the district court threw it out.
“Before anybody can bring a lawsuit, they have to have standing, meaning they actually have to have been injured,” Brent said.
Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina opposed Biden's plan arguing the president acted beyond his authority when he implemented the student loan forgiveness plan, according to an Oct. 24 USA Today article.
“They oppose it simply because they're led by Republicans and they oppose everything that Joe Biden does,” Brent said. “Unfortunately, we have judges as well, who will simply vote against things because Joe Biden and the Democrats have done it.”
Brent said however, there is a law that gives the President the power and the authority to declare national emergencies and allocate money.
“The last time this came up was when [Trump] declared a national emergency so he could transfer some military spending from the military to building the border wall,” Brent said.
In February 2019, then-President Trump declared a national emergency on the border with Mexico to access billions of dollars that had been originally denied by Congress, according to a Feb. 15, 2019 New York Times article.
Brent also said on that occasion, the Supreme Court upheld the President’s authority.
“If they upheld the President's authority in that situation, it would seem to me that they would have to uphold the President's authority in this situation,” Brent said.
As of today, payments for student loans freezed for the past three years because of the coronavirus pandemic. They are expected to resume in January 2023, according to The White House fact sheet.
Brent said the Court of Appeals has made its decision, so now it passes to the U.S. Supreme Court.
“If the court accepts it for review then it's probably going to be on hold at least until late spring or early summer next year, because the Court probably will not decide until May or June,” Brent said.
The current legal issue surrounding the student loan forgiveness plan generates uncertainties in many students' futures.
SJSU aviation senior Victor Magallanes, who applied for the student debt forgiveness plan on Oct. 28, said Republican states are doing a significant disservice to the general public that they are elected to serve.
“The economic arguments they make are baseless and do not reflect the full range of benefits that will come when many of their own constituents have the ability to contribute to the economy by spending more money freely without the worry of indebtedness to education,” Magallanes said.
He also said the block of the student loan forgiveness plan might also translate into a delay for his future plans.
“If this goes the Republicans way, I may find myself more burdened with debt and the plans I have in my life may be pushed later on than I would want.”
Similarly, SJSU economics graduate student Jerardo Jimenez said he applied to the plan on Oct. 19 because having debt forgiveness allows him to take on more debts to pursue higher education.
Jimenez said however, the Court decision shocked him even if he expected a similar political blockade by the Republicans.
“In the end, if it goes with Biden and the debt is forgiven, it is great,” Jimenez said. “But if it does not, I still have to face the reality that California is a tough place to make it without more education.”
He also said there is always a “return on investments” in education, regardless of the help provided by institutions.
Another student who applied to the student loan forgiveness plan is SJSU photography senior Eduardo Martinez.
Martinez, who applied to the plan in mid-October, said the relief is an important help especially because “going into the world with less debt is always preferred.”
He said the current block slightly worried him, but he is not surprised at all.
“If it got blocked, it would mean that I would have to pay back the loans that I took out, which was my original plan, so it’s not too devastating,” Martinez said.
