Posted July 1, 20238:24 am
With two legal decisions by the U.S. Supreme Court on Friday overruling the Biden administration's student loan debt forgiveness plans, things may seem bleak for the millions of student loan borrowers whose debt payments are likely to resume in October after a three-year pause.
Locally, there are resources to help borrowers know their rights and possibly get involved in other student loan debt forgiveness plans.
Student loans "give needed financial assistance to people who want to further their education but cannot afford it," according to The Legal Aid Society of Cleveland. "Sometimes, however, when paying back a student loan there are legal issues related to payment plans, loan forgiveness, and other lending questions."
Payments on federally held student loans have been paused since former President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security, or CARES Act, in March 2020.
Trump extended the pause twice, once each in August 2020 and December 2020. President Joe Biden extended it three times in 2021 and then twice more in 2022.
When lenders and several states challenged Biden's authority on student loan debt forgiveness, The Legal Aid Society of Cleveland filed a legal brief on behalf of more than 70 legal services and borrower advocacy organizations.
Josh Rovenger, a Harvard Law School-trained supervising attorney in the Economic Justice Practice Group at The Legal Aid Society of Cleveland and a student loan justice fellow with the Student Borrower Protection Center who has helped negotiate rules on student loans with the U.S. Department of Education, said he was surprised and disappointed by Friday's Supreme Court decisions.
"I think one, there have been long-standing rules about who can bring lawsuits in the first place and, in general, a third party cannot sue on behalf of harms that happened to someone else," he said.
But "that's essentially what the state of Missouri did on behalf of MOHELA" — the Missouri Higher Education Loan Authority, one of the nation's largest servicers of private and federal student loans — in the case of Biden v. Nebraska, Rovenger said Friday.
As the three-judge dissent in Friday's 6-3 decision in Biden v. Nebraska pointed out, the statute was designed to give the U.S. secretary of education "wide discretion to respond to national emergencies" such as the COVID-19 pandemic to make sure student loan borrowers were not affected.
He said Justice Samuel Alito's opinion in Department of Education v. Brown, the second case decided Friday in a unanimous 9-0 opinion, showed, "really the only thing the court was doing ... was evaluating the case under the HEROES Act" — the Health and Economic Recovery Omnibus Emergency Solutions Act, which was a supplement to the CARES Act.
Fortunately for student loan borrowers, the president "has a lot of other tools to cancel student loan debt" not addressed by the Supreme Court's decision.
Under the Higher Education Act, executive orders can be used to cancel some student loan debt on the basis of fraud or borrower disability, Rovenger said. Some of those could even be put in place before student loan repayments start again in October, he said.
Unless that happens, the federal government has many "punitive collection tactics" while the administrative processes to fight or challenge debt collection "don't really work," Rovenger said.
The U.S. Department of Education can seize earned income tax credits, child tax credits, garnish wages, seize Social Security retirement benefits and also seize your income tax refunds, he said.
"It's fair to say borrowers were drowning in student loan debt before the pandemic," Rovenger said. "The system was already broken beforehand. There's a caricature of a student loan borrower as a fancy lawyer or doctor, but 40 percent of borrowers don't have credentials, didn't finish their degrees, and still have debt."
Before the pandemic, a borrower defaulted on a student loan every 26 seconds, Rovenger said.
"There was a wave of defaults and delinquencies, and I think that risk has re-emerged given today's decision," he said.
Resources
The Legal Aid Society of Cleveland welcomes "all the calls" worried borrowers want to make ahead of repayments starting in October, Rovenger said.
It also may be able to represent individual borrowers who find themselves in a legal bind. General questions can be directed to the Legal Aid Society at (440) 210-4532
For Lorain County residents interested in resources, the Legal Aid Society will be hosting an event titled "Know Your Rights: Student Loan Repayment Resumes," at the Elyria Public Library's West River Branch, 1194 West River Road N. in Elyria, from 6 to 7 p.m. Sept. 14.
The event is free but registration is required at elyrialibrary.libcal.com/event/10897446. Register online, or call (440) 324-9825.
The Sept. 14 presentation "will provide borrowers with the tools they need to navigate the return to repayment," including an introduction to the basics of student loans; a new income-driven repayment program that will benefit most borrowers; an overview of loan discharge and forgiveness programs; a review of time-limited programs for borrowers in default and those who have been in repayment for decades; an update on the status of the government’s one-time cancellation program, and where borrowers can find additional help, according to the Legal Aid Society.
Student loan borrowers with questions can also use the following online resources:
- Info Line: lasclev.org/econjusticeinfoline
- Resources: lasclev.org/get-help/money/student-loans
Those currently working or recently unemployed who have questions about their rights at work, about unemployment benefits or student loans can call the Legal Aid Society's Economic Justice Information Line at (440) 210-4532 (for Lorain, Ashtabula, Geauga, and Lake counties) or (216) 861-5899 in Cuyahoga County.
Source: The Chronicle Telegram - With payments starting again in October, Legal Aid Society has resources for student loan borrowers