Education Department readies latest tranche of student debt relief

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Aug 14, 2023 View in browser   By Michael Stratford A FRESH ROUND OF STUDENT DEBT RELIEF BEGINS: The Biden administration today is set to begin discharging $39 billion of student debt for hundreds of thousands of borrowers who’ve been in repayment on their loans for more than 20 years. — It’s the latest bucket of student debt relief that the Biden administration is pursuing amid legal obstacles and major political pushback from Republicans. President Joe Biden speaks about student loan debt forgiveness in the Roosevelt Room of the White House, while Education Secretary Miguel Cardona listens at right, Aug. 24, 2022, in Washington. | Evan Vucci/AP Photo — The program is aimed at compensating federal student loan borrowers for what administration officials have said were longstanding failures in how the Education Department and its contracted loan servicers have managed federal income-driven repayment programs. — Those programs promise borrowers the opportunity to have their debts erased entirely after they make payments for either 20 or 25 years, depending on the plan. But relatively few borrowers have ever received forgiveness through income-driven repayment. — Part of the problem, according to state and federal regulators, was that student loan servicers were improperly pushing borrowers into long-term forbearances that don’t qualify for credit toward loan forgiveness. In other cases, the Education Department did not properly track borrowers’ monthly payments over time. — Flashback: The Education Department first announced in April 2022 that it planned to retroactively adjust borrower accounts to give credit for each month in which borrowers could have made a qualifying payment under an income-driven repayment plan, regardless of whether they did. — Those updated payment counts have pushed some 804,000 borrowers over the threshold of 20 or 25 years of payments, entitling them to loan forgiveness under the plans. The Biden administration began sending notices about that relief to borrowers earlier this summer, announcing it just weeks after its broader loan forgiveness program was struck down by the Supreme Court. — Borrowers who are in line for the relief had until yesterday to opt out, and the Education Department has said it’ll begin carrying out the loan discharges as early as today. — But legal threats loom over the program: Two conservative groups, the Cato Institute and Mackinac Center for Public Policy, have asked a federal judge to issue an immediate order blocking the loan forgiveness. The groups, which claim the relief could harm their recruitment efforts, argue the Biden administration is abusing its authority in retroactively awarding credit to borrowers. — As of Sunday night, the federal judge overseeing the case had not yet ruled on the groups’ request. The organizations had asked the judge to rule before the loan discharges are set to begin today. IT’S MONDAY, AUG. 14. WELCOME TO MORNING EDUCATION. Please send tips and feedback to the POLITICO education team: Michael Stratford (mstratford@politico.com), Mackenzie Wilkes (mwilkes@politico.com), Juan Perez Jr. (jperez@politico.com) and Bianca Quilantan (bquilantan@politico.com). Follow us on X: @Morning_Edu and @POLITICOPro.   YOUR TICKET INSIDE THE GOLDEN STATE POLITICAL ARENA: California Playbook delivers the latest intel, buzzy scoops and exclusive coverage from Sacramento and Los Angeles to Silicon Valley and across the state. Don't miss out on the daily must-read for political aficionados and professionals with an outsized interest in California politics, policy and power. Subscribe today.     Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories. Driving the day HAPPENING TODAY — AFFIRMATIVE ACTION GUIDANCE INCOMING: The Biden administration this morning plans to unveil its much-anticipated legal guidance to colleges and universities in the wake of the Supreme Court’s decision earlier this summer that struck down race-conscious admissions practices in higher education. — “Colleges and universities should continue their commitment to support, retain, and graduate diverse students and classes,” Biden said immediately after the court’s ruling in June. Administration officials promised that the Education Department and Justice Department would issue guidance to colleges about their admissions practices within 45 days of the decision. — Last month, key Biden administration civil rights officials told higher education leaders not to be intimidated by groups threatening admissions practices and encouraged them to consider "lawful" paths to admit diverse classes. The guidance is expected to fill in some of the details about what options the administration believes colleges and universities still have under the Supreme Court’s ruling. Higher Education ‘CAUSE FOR CONCERN’ — EDUCATION DEPT SOUNDS ALARM ON GRAD SCHOOL BORROWING: Education Department officials last week unveiled a new analysis that details the explosive growth of federal borrowing for graduate schools. — The report is the first in a series on graduate borrowing by the department’s Office of the Chief Economist, which examined student outcomes across about 5,300 graduate programs. Authors Tomás Monarrez and Jordan Matsudaira write that their findings “suggest cause for concern.” — They conclude that “in many graduate programs across public, private nonprofit, and private for-profit institutions, too many borrowers graduate with debt levels that are too high relatively to their early career earnings.” — A key takeaway: “There is generally very little correspondence between the amount students borrower to finance their advanced degrees and their labor market outcomes.” Read the report here. MOVERS AND SHAKERS BIDEN’S PICK FOR ECONOMIC ADVISER HAS EDUCATION FOCUS: President Joe Biden plans to name a prominent education researcher to a top economic post in his White House. Biden announced Friday he would appoint C. Kirabo Jackson, a labor economist whose work has focused on school funding, to join the Council of Economic Advisers. — Jackson is currently a professor of education and social policy at Northwestern University. In announcing the appointment, the White House noted that his “research has explored the role of teachers in the K-12 system, the causal impact of public-school spending on students, methods to measure impacts on students’ socio-emotional skills, and other education-related subjects.”   DON’T MISS POLITICO’S TECH & AI SUMMIT: America’s ability to lead and champion emerging innovations in technology like generative AI will shape our industries, manufacturing base and future economy. Do we have the right policies in place to secure that future? How will the U.S. retain its status as the global tech leader? Join POLITICO on Sept. 27 for our Tech & AI Summit to hear what the public and private sectors need to do to sharpen our competitive edge amidst rising global competitors and rapidly evolving disruptive technologies. REGISTER HERE.     Report Roundup — The Education Department’s inspector general said in a report that the Office of Federal Student Aid could do a better job of reaching out to underserved communities. Syllabus — Texas revamps Houston schools, closing libraries and angering parents: The New York Times. — Nevada school choice debate not over as governor has a plan to fund private school scholarships: The Associated Press. — Millions of kids are missing weeks of school as attendance tanks across the U.S.: The Associated Press. — The stock market is no fun when student loan payments are about to restart: The Wall Street Journal. — West Virginia University outlines proposed program and faculty cuts: The Associated Press.   Follow us on Twitter Delece Smith-Barrow @DeleceWrites Michael Stratford @mstratford Bianca Quilantan @biancaquilan Juan Perez Jr. @PerezJr Mackenzie Wilkes @macwilkes   Follow us

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