Will some private student loan borrowers get their loans forgiven?
amendment would provide for private student loan forgiveness on the basis of disability, similar to the Total and Permanent Disability program for federal student loan borrowers, as well as a death discharge. A similar initiative was supported by House Democrats last year, although that initiative also included $10,000 in private student loan forgiveness for economically distressed borrowers, regardless of whether or not they were disabled.
The Consumer Bankers Association, a trade group representing financial institutions, criticized the proposed amendments in a, arguing that private student loans “have no impact on our nation’s defense” and the amendments “have never even had a hearing in Congress.” The Association pointed to federal student loans as a more serious financial problem for borrowers.
The Biden administration has enacted several significant student loan relief initiatives during the last nine months including extending the payment pause and interest freeze for federal student loans, and establishing nearlyunder existing federal programs such as the Total and Permanent Disability program and Borrower Defense to Repayment.
But private student loans have been excluded from these relief initiatives. Most private student loan borrowers have still had to make their normal monthly payments, despite the global pandemic and economic downturn. Private student loan borrowers who have been unable to keep up with their payments and have gone into default have been subject to collections efforts, including lawsuits.
Biden’s legal authority to act unilaterally is limited to programs established under federal law, and he must act under existing federal statutes and accompanying regulations. Federal student loan programs are governed by statutes such as the Higher Education Act and the HEROES Act of 2003, as well as the CARES Act that was enacted last year. But these statutes do not empower Biden to provide any relief for private student loan borrowers.
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