Biden administration eases student loan forgiveness through income-based repayment plans

“The Biden administration on Tuesday announced changes to federal student loan repayment plans that will make it easier for millions of borrowers to have their debts forgiven after being required to pay for 20 or 25 years.

Education Department officials said they would make a one-time revision to millions of borrower accounts to compensate for what they called longstanding failures of how the agency and its contracted loan servicers managed the income-driven repayment programs. Democrats and consumer groups have been calling on the Biden administration to enact such a policy in recent months.

The income-driven repayment programs are designed to provide loan forgiveness to borrowers who have been making payments tied to their income for at least 20 or 25 years. But few borrowers have successfully received relief under those plans, which Democrats have long promoted as an important safety-net for struggling borrowers.”

“The Education Department said it would make a one-time adjustment to borrower accounts to provide credit toward loan forgiveness under income-driven repayment for any month in which a borrower made a payment. Officials will credit borrowers regardless of whether they were enrolled in an income-driven repayment plan.”

“Department officials said they would credit borrowers for months in which borrowers were in long-term forbearances or any type of deferment before 2013. But borrowers will not receive automatic credit for months in which they were in default or enrolled in shorter-term forbearances or certain types of deferments after 2013.”

“The Education Department said the changes lead to “immediate debt cancellation” for at least 40,000 borrowers under the Public Service Loan Forgiveness program and “several thousand” borrowers under income-based repayment programs.

A further 3.6 million borrowers will receive at least three years of retroactive credit towards loan forgiveness under income-driven repayment. The credit will be automatically applied to borrower accounts, regardless of whether a borrower is currently enrolled in an income-driven repayment plan”

It was a great day in the Supreme Court for anyone who wants to bribe a lawmaker

“The case is Federal Election Commission v. Ted Cruz for Senate, and it involves a federal law intended to prevent campaign donors from putting money directly into the pockets of elected officials. Specifically, the law permits candidates to loan money to their own campaigns, but forbids the campaign from repaying more than $250,000 of that loan from funds raised after the election takes place.

Typically, federal law draws a sharp line between money donated to a campaign, which can only be spent on the election effort, and money given directly to a candidate, which is ordinarily not allowed. But loan repayments exist in a gray area between these two kinds of donations. Yes, money repaid to a candidate ostensibly just reimburses that candidate for money they fronted during the campaign. But any dollar given by donors to repay such loans still goes into the pocket of a former candidate who may very well be a powerful elected official by the time they receive the money.

Without a cap on loan repayments, elected officials with clever accountants could profit off of their donors. In 1998, for example, Rep. Grace Napolitano (D-CA) made a $150,000 loan to her campaign at 18 percent interest (though she later reduced that interest rate to 10 percent). By 2009, she’d reportedly raised $221,780 to repay that loan, meaning that she earned at least $71,000 in profits.

Thus, should this challenge to the repayment cap succeed — and it appears overwhelmingly likely to succeed — elected officials could potentially make enormous loans to their campaigns at high interest rates, and then use those loans as a vehicle to accept bribes from lobbyists and other donors who want to trade money for access to the official.”