Forgive and Forget?

Kali Jerrard

CounterCurrent: Week of 05/20/2024

The growth of federal college debt forgiveness programs while string-free dollars continue pouring into colleges and universities should raise eyebrows.

Student loan forgiveness is a bait and switch. Colleges still get paid and students still accrue debt, all while colleges and universities water down degrees, raise tuition, and never share accountability for driving students into debt. 

Perhaps thrusting young adults into large amounts of debt with little to no financial planning knowledge is not the best social policy—I believe my colleague Jared Gould would agree.

Implementing accountability measures in college and university administrations is a great place to start. The Republicans’ College Cost Reduction Act has been discussed as a measure to provide this accountability, but even left-leaning organizations are jumping on board with measures of their own. “The days when the public just gave money to colleges with virtually no accountability mechanisms are numbered,” says Minding the Campus contributor Andrew Gillen. “There is bipartisan agreement that more accountability is needed in higher education, and risk-sharing in particular is gaining traction.” 

Gillen updated his article on the current state of play earlier this month. Since April, the Biden administration has continued to charge full steam ahead in its efforts to forgive student loan debt for millions of borrowers. But new challenges to existing plans have also arisen. He notes that:

  • The newest plan relying on regulatory changes under the Higher Education Act has been released. 
  • There is a new court case against the SAVE plan. 
  • There is an update to the legal status of the borrower defense and closed school discharge plans to reflect an injunction from the Fifth Circuit.

First, after the Biden administration lost the HEROES plan in a Supreme Court decision, they quickly proposed a new plan which draws authority from the Higher Education Act. This new plan would

  • Waive unpaid interest. 
  • Forgive debt for those who have repaid for 20 years (25 years if there is debt for graduate school). 
  • Forgive debt for those who attended a low‐​financial value program (e.g., programs or colleges that fail the Cohort Default Rate or Gainful Employment). 
  • Release additional regulations soon (under a pending plan) that will forgive debt for those undergoing economic hardship.

This specific plan will likely run into the same legal actions as the HEROES plan and fall short. 

Regarding the SAVE plan, which is a generous redo of the existing REPAYE plan, parts of the plan have been implemented with the entirety going into play in July of this year. Should the lawsuits not prevail, taxpayers would be saddled with an estimated $475 billion dollars in costs for the next ten years from the SAVE plan. 

An injunction from the Fifth Circuit Court of Appeals has thankfully put on hold the recent changes to the borrower defense to repayment plan. Gillen explains, “If a for‐​profit college can be declared to have substantially misled students, they can be ruined financially by the clawbacks. Indeed, new regulations from the Biden administration would make it much easier to conclude a college engaged in misconduct.” The program allows the Biden administration to use loopholes to forgive more debt outside existing law. Shadiness abounds in this plan. “For example, $5.8 billion of debt for Corinthian College students was forgiven even if students didn’t submit a borrower defense claim. The administration has promised to forgo clawbacks on much of it (likely in part to avoid giving affected colleges standing to oppose the changes in court).” 

As the current administration continues its plans to forgive student loan debt—nearing $160 billion out of $1.6 trillion in total debt—we must hold lawmakers and bureaucrats accountable for their actions. The Education Department has announced that borrowers have more time to apply for the IDR Account Adjustment, a Biden administration program that can either result in immediate loan forgiveness or significantly shorten a borrower's loan term. Some of the administration's plans, like the new proposal under the Higher Education Act, are still open for public comment, while others are headed to court. Efforts to implement accountability for colleges and universities have yet to achieve their goals.  

While the government and higher education institutions may be eager to forgive and forget, those who care about the integrity of higher education must continue to speak up.

Until next week.

CounterCurrent is the National Association of Scholars’ weekly newsletter, written by the NAS Staff. To subscribe, update your email preferences here.

Photo by Sergey Nivens on Adobe Stock

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