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For nearly 15 years, Trygve “Spike” Magelssen says he faithfully paid off his student loans every month, slowly reducing the initial debt by $ 53,000, even as medical bills, a home improvement loan, and other costs. left him “financially up against a wall.”
Then, in late 2018, Magelssen, associate professor of electrical technology at Montana State University-Northern, questioned whether he could benefit from Congress’ temporary expansion of the so-called utility loan forgiveness program. . Civil servants, including teachers, healthcare workers and law enforcement, can apply under certain conditions and must make 10 years of payments before the loan balance can be written off.
But after reaching out to a federal student loans office for help, Magelssen learned that her past payments couldn’t count retroactively. Plus, even if he signed up, he realized he could pay off the rest of his debt in less time than it would take to reach the 10-year threshold.
“It was a dead end,” said Magelssen, 62, whose current student debt is about $ 21,500, made up mostly of interest.
For student borrowers like Magelssen, who either did not apply or could have qualified had they known about the program sooner, they hope the next administration led by President-elect Joe Biden will throw a lifeline for them while protecting their interests, in particular. during a pandemic that left millions of Americans jobless or underpaid.
These borrowers can make their wish come true.
Biden said he would tackle loan cancellation for civil servants by providing $ 10,000 in student debt relief for each year of service, up to five years. This includes working in a school, for the government or in a nonprofit setting. Student borrowers would be automatically enrolled, according to its plan, and a previous “national or community service” would also allow a borrower to qualify.
According to the Brookings Institution, a Washington-based think tank, the nation’s 45 million student borrowers have an estimated $ 1.7 trillion in student loan debt – less than total mortgage debt but higher than total mortgage debt. credit card.
“It should be done immediately,” Biden told reporters last week of his student loan forgiveness plan.
But he has not pledged to respond to other Democrats’ demands for a larger student loan forgiveness program or even full debt forgiveness as part of his larger agenda for higher education.
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In a press conference on Tuesday, Senate Minority Leader Chuck Schumer, DN.Y., urged Biden to issue an executive order once he takes office to begin his debt relief proposal student.
“Higher education should be a ladder,” Schumer said. “Student debt is an anchor around the ankles of these children.”
Schumer, along with Senator Elizabeth Warren, D-Mass., And other Democrats, have laid out a plan for Biden to take immediate action once he becomes president, including using the executive branch to ensure that there is no tax liability for federal borrowers.
Some economists and policymakers have questioned the benefits to the economy if student debt were canceled and how the Biden administration would pay its cost, which is expected to run into the billions.
It’s also unclear who Biden will appoint to replace Betsy DeVos as the head of the education department. Meanwhile, student loan supporters say if Republicans retain control of the Senate, a divided Congress could derail substantial student loan reform efforts or make it harder for Biden to overturn some policies adopted under the Trump administration. .
A report released this week by student loan experts and lawyers titled “Delivering on Debt Relief” argues that the approaches – administrative action or legislation – are not mutually exclusive and will depend on specific circumstances and relief programs. debt that the Biden administration is trying to reform.
Student advocacy groups say the civil service loan forgiveness program needs sweeping changes. A 2019 Government Accountability Office report found that DeVos’ Department of Education turned down 99% of applications under the expanded loan forgiveness program.
“These programs don’t work,” said Seth Frotman, executive director of the Student Borrower Protection Center, a consumer advocacy group that worked on the report. “They are broken because of incompetence in Ed’s Department or because of the widespread illegal practices of for-profit colleges and predatory schools. A new Biden administration, in its most basic function, has the chance to improve the lives of millions of people. “
Biden says he also supports the cancellation of student debt owed by those who have been defrauded by for-profit colleges.
DeVos has been criticized for hiring several industry insiders and for freezing Obama-era regulations that would have increased protection for students. But the education ministry defended its actions, saying those hired were “highly qualified” and recused themselves if necessary.
Theresa Sweet, a Bay Area student loaner who was the main plaintiff in a 2019 lawsuit against DeVos, said Wednesday she had lost faith in an education department she believed was supposed to protect the interests of students.
His lawsuit, brought by lawyers for the Predatory Student Loans Project at Harvard Law School, alleges that DeVos illegally blocked a program known as the borrower’s defense against repayment, a 1990s regulation that was extended under the Obama administration and said that borrowers are deceived by their schools to qualify for federal loan forgiveness.
But after a settlement deal in April, in which DeVos did not admit any wrongdoing but vowed to rule quickly on the program, the education ministry began to blanket student borrowers – setting up a ongoing legal dispute which may eventually end under the next administration.
The Education Department did not immediately respond to a request for comment on Wednesday after a judge ruled that student borrowers would not have to make applicable loan payments until the case was resolved.
Sweet, a nursing assistant, said the Biden administration needs to ensure the law is enforced as written.
“If the next DOE secretary does not come forward to defend the borrowers, I have a feeling that we are still going to have to fight,” she added. “And I will continue to fight until this situation receives some justice.”
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