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The thing is that some student loans can still be discharged on bankruptcy. It isn't popular because it's time consuming. It's easier if the person is elderly, living on a fixed income or disabled, I have seen younger people that decided to not use their degree, have it discharged.
I posted about one guy who had a law degree that decided he didn't want to do that any more when COVID hit. He successfully got his loans zeroed out. His grew to $400k.
There's something called the Brunner test, if that can be satisfied, loans will be discharged in bankruptcy.
You have to read the first article to get the guys whole story. Obviously he didn't need an attorney because that's what his degree was in.
Yes, loans can be discharged, but it is rare. There’s a reason why there are only a few one-off stories about it happening, like the one you posted. I can think of another case that happened recently where a medical graduate who got his MD overseas could not get into a US residency program after multiple attempts. So his MD was effectively worthless. He ended up working retail jobs while his loans ballooned to around $500k. He was making some payments but obviously couldn’t really make a dent. He was living with his parents in California. He got almost all of his loans forgiven (I think he owed $40K when it was all said and done).
I am an MD and the crazy thing is, I’ve met people along my career who got out of medicine altogether (switched careers) or some did a second residency (switched specialties) causing their loans to balloon. As long as you are in medicine, it’s pretty easy to pay it off, but for people who switch careers, it can be crippling. The few that I know who have done that have just bitten the dust and paid it off though (almost like a second mortgage).
Biden can extend the pause but he can't relieve student loans, Congress can, but not the President. Even Pelosi acknowledged that.
“The President can’t do it…That’s not even a discussion,” Pelosi said.
While it is correct that the president can only cancel student loan debt with congressional approval, there are conflicting opinions over whether Congress has already granted the president such authority under existing legislation.
Quote:
Supporters of student debt cancellation by the administration typically rely on a memo sent to Senator Elizabeth Warren, a Democrat from Massachusetts, last year as an explanation for the legality of the action.
. . .
"The way they lay it out appears to be pretty clear," said Kyra Taylor, a staff attorney at the National Consumer Law Center. "The president -- via the secretary -- has the authority to compromise or modify debts under the Higher Education Act."
Specifically, the memo states that the secretary of education has been granted an "unrestricted authority to create and [sic] to cancel or modify debt owed under federal student loan programs" by Congress. That power is granted in a section of the Higher Education Act of 1965 that says the secretary may "enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption."
Quote:
The Biden administration has already used this legal authority in not allowing interest to accrue for borrowers during the COVID-19 pandemic, said Dalié Jiménez, director of the Student Loan Law Initiative at the University of California, Irvine.
"Call it what you want, but the best legal reasoning for it is the same that the secretary or the president could be using to cancel student debt," Jiménez said. "The law and the regulations give the secretary a lot of power, and they do not have an explicit cutoff for that power because it has not been tested. No one has challenged the forgiveness of the interest."
But Reed Rubinstein, former principal deputy general counsel under Betsy DeVos at the Department of Education, said there is a limit to that power, and the pandemic-related pauses surrounding student loans are it.
Granted, I don't see the current Supreme Court blessing such an expansive interpretation of this law, but if Biden tried to do this I think this is a battle that would ultimately be decided by the Supreme Court.
Thanks, I had not seen that anyone even gave the answer on whether he could or not in every article I've read. I didn't think he could.
The thing is that some student loans can still be discharged on bankruptcy. It isn't popular because it's time consuming. It's easier if the person is elderly, living on a fixed income or disabled, I have seen younger people that decided to not use their degree, have it discharged.
I posted about one guy who had a law degree that decided he didn't want to do that any more when COVID hit. He successfully got his loans zeroed out. His grew to $400k.
There's something called the Brunner test, if that can be satisfied, loans will be discharged in bankruptcy.
You have to read the first article to get the guys whole story. Obviously he didn't need an attorney because that's what his degree was in.
Oh, definitely. Based on the test outlined, it appears (on paper) fairly easy to satisfy the Brunner test. In practice, however, I read some time ago that bankruptcy courts have been rather stringent in applying the test, with a relative few such requests being granted.
If we forgive them we can't give them to people anymore, that's just an uncomfortable fact nobody wants to talk about. I don't know what's going to happen but I assume most people will just start paying.
Agree, if they forgive them then they should stop doing loans period. Not fair to forgive this bunch then keep charging others.
Quote:
Originally Posted by prospectheightsresident
While it is correct that the president can only cancel student loan debt with congressional approval, there are conflicting opinions over whether Congress has already granted the president such authority under existing legislation.
Granted, I don't see the current Supreme Court blessing such an expansive interpretation of this law, but if Biden tried to do this I think this is a battle that would ultimately be decided by the Supreme Court.
No way he has the authority to do it after reading that. I agree with the last part that says
the Biden administration can't cancel student debt due to the Antideficiency Act, which prohibits executive branch officials from spending money Congress hasn't appropriated.
"Broad student debt cancellation would trigger The Antideficiency Act, because the Department of Education would be spending funds that have not been appropriated," the memo says.
Quote:
Originally Posted by prospectheightsresident
Oh, definitely. Based on the test outlined, it appears (on paper) fairly easy to satisfy the Brunner test. In practice, however, I read some time ago that bankruptcy courts have been rather stringent in applying the test, with a relative few such requests being granted.
I've seen a few others that have done it like this guy. I guess you have to be motivated to do it.
Agree, if they forgive them then they should stop doing loans period. Not fair to forgive this bunch then keep charging others.
No way he has the authority to do it after reading that. I agree with the last part that says
the Biden administration can't cancel student debt due to the Antideficiency Act, which prohibits executive branch officials from spending money Congress hasn't appropriated.
"Broad student debt cancellation would trigger The Antideficiency Act, because the Department of Education would be spending funds that have not been appropriated," the memo says.
I've seen a few others that have done it like this guy. I guess you have to be motivated to do it.
While I don't advocate for blanket debt forgiveness, I argue that the pro-loan forgiveness folks (i.e. the Elizabeth Warren and Berrnie Sanders crowd) have the stronger argument. In relevant part, the Antideficiency Act reads:
Quote:
(a)
(1)Except as specified in this subchapter or any other provision of law, an officer or employee of the United States Government or of the District of Columbia government may not—
(A)make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation;
(B)involve either government in a contract or obligation for the payment of money before an appropriation is made unless authorized by law;
(C)make or authorize an expenditure or obligation of funds required to be sequestered under section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985; or
(D)involve either government in a contract or obligation for the payment of money required to be sequestered under section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985.
In holding that, in relevant part, except as specified in "any other provision of law" (in addition to the Antideficiency Act itself), I think there is a reasonable argument to be made that the portion of the Higher Education Act of 1865 that reads that the Secretary may
Quote:
enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption
Note, even if the Supreme Court did hold that the above reading is inapplicable, I could see limited debt forgiveness being authorized so long as it was capped at annual appropriations that the secretary has discretion over each year. On that note, I am curious (but highly dubious) to know whether the current pause amounts exceed the funds that Congress has appropriated within a given period
In other words, there are increasing signs that the current student loan pause will be extended past May:
Quote:
The U.S. Department of Education has directed the companies that service federal student loans not to send out notices about payments restarting in May, according to two people familiar with the matter.
Servicers that would have sent out the reminders to borrowers at the end of the month are now holding off.
The news is the clearest sign yet the Biden administration is considering extending the payment pause for federal student loan borrowers once again. It remains unclear how much more time, if any, borrowers may get.
Looks like it’s possible Biden may extend the pause past May.
While I appreciate not having to pay for now, all these extensions make it a little difficult to plan for the long term. Either end the pause, or just forgive them already.
Thanks. I brought over an article the other day that said the same.
Quote:
Originally Posted by Eyebee Teepee
why haven't you been paying for ~2 years? Lost your job to Covid?
The ones here not paying have said that not paying they still get credit for making payments during the pause even though they made none. It's forgiven like they have been paying it
Thanks. I brought over an article the other day that said the same.
The ones here not paying have said that not paying they still get credit for making payments during the pause even though they made none. It's forgiven like they have been paying it
that doesn't appear correct, so I wonder if this info from Experian is wrong, or the debtors are wrong
The student loan pause/freeze meant they didn't have to make payments, and interest didn't accrue during that period. They were not "credited for payments", as per this part of my link:
"Student loan forbearance, part of the Coronavirus Aid, Relief, and Economic Security (CARES Act) economic stimulus bill that paused student loan repayment, interest accrual, and collections, is set to expire on May 1, 2022.
Borrowers who carry federal student loans in the United States need to anticipate the resumption of repayment and interest accrual."
"Will balances be the same as they were before the student loan pause? Will it take the same amount of time to pay off the student loan? "
"For those on a traditional repayment plan, a student loan servicer might recalculate the amount based on the principal and interest and the amount of time left in the repayment period. Borrowers will still make payments for the same number of months in total, but the end date for repayment will be pushed forward to accommodate the payment pause.
In other words, if the loan terms originally stated that it would be repaid in full on January 1, 2030, the new terms will accommodate the pause and show full repayment on January 1, 2032."
I have italicized what might be the wording the borrowers are hanging on; clearly, they may have received such "we'll act like you paid" from the lenders/servicers.
But it doesn't appear that's the given program terms.
Yeah I think the whole "we'll treat it as if you paid" thing is around delinquency, default, and reporting to the credit bureaus. They aren't going to report non-payment and delinquency to the bureaus and trash your credit. In that way it will be treated as if you paid on time each month. But if people think their loans balances will be reduced as a reflection of 2yrs of payments made, I think they will be sorely mistaken.
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