Joe Biden’s newest u-turn on his loan forgiveness program is going to cost his party votes, as borrowers with private loans are generally a large voting bloc.
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Student loan borrowers will have to double check if their loans still qualify for debt relief.
According to the Hill, in accordance with Education Department guidance, President Biden’s student loan forgiveness plan was abruptly updated on Thursday to exclude borrowers with privately held federal student loans.
According to the guidance, borrowers with federal student loans not held by the Education Department no longer qualify for one-time debt relief by consolidating those loans into Direct Loans.
This sudden move affects more than 4 million student loan borrowers. In total, about forty-five million Americans owe student loans.
The Daily Mail notes that there is a concern that the companies could sue the Biden administration if they cut back on Perkins and Federal Family Education Loans – bank loans backed by federal guarantees.
Losing business could cause private banks to sue to stop the loan forgiveness program.
This week, the first lawsuit against the program was filed by a plaintiff living in one of six states that tax loan forgiveness like income – a move that will leave people on the hook for hundreds of thousands of dollars in taxes.
In a second lawsuit, six Republican-led states challenge the program under the argument that President Joe Biden had said the pandemic was ‘over’.
According to a new Congressional Budget Office estimate released this week, the plan to cancel student loans will cost $400 billion over a decade under the new plan.
The sudden change in eligibility for President Biden’s student loan forgiveness plan is sure to cause backlash among democrats. It will be interesting to see how this plays out in the coming weeks.
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