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I did not even know the clock was ticking.
As one of several million older Americans who have been making payments on a Federal Family Education Loan (FFEL) for decades, I felt hopeful in late summer when President Biden promised to cancel up to $10,000 in student loan debt for individuals who now make less than $125,000. He promised to cancel as much as $20,000 for borrowers, like myself, who also received Federal Pell Grants for significant financial need.
Just over a month later, on September 29, Biden quietly changed his mind.
No public announcement was made. The Department of Education simply changed the language on its website that morning—the very day that had been set as the deadline for FFEL borrowers to apply.
“As of Sept. 29, 2022, borrowers with federal student loans not held by ED cannot obtain one-time debt relief by consolidating those loans into Direct Loans,” the revised website said. Overnight, “can” had become “cannot.”
That was it. My dream of finally paying off my student loans and helping my daughter pay for college came to a halt.
Instead of having over a year to reconsolidate and apply for the promised relief, suddenly FFEL borrowers were not even eligible. Politico reported that Senator Elizabeth Warren (District of Massachusetts), when asked for her opinion that same afternoon, admitted, “I don’t know what you’re talking about, so I can’t comment on it.”
The opportunity to profoundly improve our lives and fortunes had been taken away without warning. It was gone. I felt nauseous.
I chose to pay for my education the only way I could. I chose to teach rather than enter a more lucrative profession. I chose to work part-time and earn less, but arrive home just before my kid got off the school bus. I took responsibility for and felt proud of my choices and sacrifices.
Perhaps what’s most torturous for older borrowers like me is that we could have reconsolidated and applied, if we had done so before the rules were changed without notice. When I called my lender, Vermont Student Assistance Corporation (VSAC), they assured me there was no reason to rush. Nor did it occur to me to question the expertise of my lender, the Department of Education’s authority, my president’s new policy—or his word.
What’s behind the president’s about-face? Politico’s Michael Stratford reasoned that the student loan industry “is widely seen, both inside and outside the administration, as presenting the greatest legal risk to the debt relief program.” However, amidst a flurry of lawsuits, the first major challenge came when six GOP states—Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina—filed a joint suit on September 29, the same morning Biden reversed course.
These states claim—and must prove—that they would be harmed by lost income tax revenue (relief will not be taxable) and deprived of student loan interest. Attorney Steven Chung, a columnist at the news site Above the Law, argues that if the first assertion is true, then why haven’t these states proposed legislation to make canceled debt taxable on the state level?
These Republican-led states must also prove that they have a legal right to stop borrowers from repaying their loans early. Refinancing is common, there is no penalty, and doing so eliminates the risk of default. Chung says, “In sum, it will be hard to show harm if the borrowers abided by the loan contracts, although not quite in the way the plaintiffs wanted.” He also points out that the lawsuit reveals how student loans function as an additional “secret tax” on borrowers.
Biden’s sudden reversal left many of his plan’s fiercest supporters fuming. “Clearly it’s a struggle in this economy for students,” said Representative Yvette Clarke (New York’s 9th congressional district). Representative Ro Khanna (California’s 17th congressional district) added that it “would be a big mistake to take away hope from young people who are counting on this forgiveness.”
The fact that both Clarke and Khanna referred only to “students” and “young people” suggests that they didn’t yet know it is older Americans like myself who are being abruptly left behind.
We were never warned that we could soon be treated as “a separate and unequal class.” On Twitter and Facebook, you can type #FFEL for stories of businesses that borrowers can’t afford to start, down payments they can’t invest in a home, and children they cannot send to college.
If ever there appeared to be a good example of big government treachery—this is it.
It’s a terrible look for Biden and his administration.
In another whiplash-inducing reversal, the Department of Education’s website announced on November 11 that court orders have blocked the entire student loan debt relief program. They’ve even stopped accepting applications.
Texas’s Trump-appointed U.S. District Judge Mark T. Pittman—a member of the Federalist Society who ruled in favor of open carry for 18–20-year-olds—sided with a conservative nonprofit that calls itself the Job Creators Network Foundation. Founded by Bernie Marcus, a GOP donor and Trump supporter who co-founded Home Depot, the nonprofit’s legal team argues that only Congress, not the POTUS, has the right to decide who is eligible and for what degree of forgiveness. The suit’s two plaintiffs, one a FFEL borrower, also allege that all borrowers should have had an opportunity to comment on the program.
The Biden administration is fighting to overturn those orders. The U.S. Fifth Circuit Court of Appeals could send the case to the lower court. Regardless, the case could also end up in the Supreme Court. The Wall Street Journal noted that Biden’s debt forgiveness plan “is likely to come under closer scrutiny if Republicans capture the House of Representatives once midterm election vote-counting concludes.”
For the 26 million borrowers who’ve already applied for the program and 11 million who could have applied before Judge Pittman’s recent decision, their hopes are on hold while the government works to sort out what is becoming a colossal fiasco for this administration.
Biden risks alienating 37 million voters who are eligible for federal student loan debt cancellation—the college-educated who are statistically more likely to vote Democrat. Notably, 22.5 million of these borrowers are under the age of 34 and had an historic “major impact” on the 2022 midterm elections.
Furthermore, women and people of color, widely considered the Democratic party’s most reliable voters (especially in the wake of Roe being overturned) are disproportionately impacted. Women hold about two-thirds of all student loan debt in the U.S., with Black women and men holding the largest debt, as much as $25,000 more than white college graduates.
The Biden-Harris administration must rescue their student debt relief plan and restart the clock for over 40 million people—not give aid and comfort to critics, or estrange millions of voters. Biden cannot afford to betray us, older Americans, who have spent decades paying off debts to have a chance at the American Dream, much less young people, the future of the Democratic Party.