The “North Star Promise” pertains strictly to Minnesota’s state institutions and is part of an overarching higher education budget bill. This agreement aims to bolster the state’s fledgling enrollment and labor workforce shortage, according to the Star Tribune of Minneapolis.

“This is the type of thing that we need to do to ensure that we have a skilled labor workforce that can get into that workforce and not have to incur debt,” said Gene Pelowski, chair of the House Higher Education Committee.

The program is estimated to cost $117 million in the fiscal year beginning July 1 and $49.5 million annually. The first year’s formidable budget includes its startup costs.

Eligible students must be enrolled in at least one credit per semester at a public community college or four-year university in either the University of Minnesota, Minnesota State system, or a state tribal college. They must also be in good academic standing and have completed a FAFSA form. Residents’ forms cannot display a dollar over $80,000 to be potentially granted the reward.

The “North Star Promise” would be a last-dollar scholarship program, meaning it would be enacted only after grants and scholarships from the school, state and federal budget have been applied. The University of Minnesota and Minnesota State systems would also see a significant state budget increase, incentivizing schools not to reduce their scholarship allotment and pushing the bulk onto the new program.

However, the language of the initiative must be agreed on by both the House and Senate, and it won’t be an easy battle. The only Republican on the conference committee that settled the “North Star Promise” was “completely frozen out of all discussions.”

More from UB: Minnesota’s “bold action to make college affordable” grants free tuition

Other states to track

While at least 14 states offer free tuition at the community college level, free 4-year programs are harder to come by.

California

The Excelsior Scholarship covers tuition for first-year students whose families make up to $125,000. They must be enrolled full-time in two- or four-year programs at SUNY and CUNY schools. However, a student must remain in New York for the same number of years after graduation as they were while earning the scholarship. If not, the scholarship converts to a loan.

Indiana

The 21st Century Scholarship pays 100% of Indiana-resident student tuition at a state two- or four-year institution for up to four years, and it even partially covers tuition at a private university. Students must begin applying at either the 7th- or 8th-grade level and fulfill all Scholar Success Program requirements at every grade level.

Washington

The College Bound Scholarship Washington is unique in that besides providing a tuition-free scholarship to eligible students, it also covers some fees and a small book allowance. Students must apply for the College Bound scholarship before their 8th-grade year ends, meet Bound Pledge requirements in their senior year of high school, submit the FAFSA or state version (WASFA) and meet income requirements.

The post Minnesota’s “bold action to make college affordable” results in free tuition appeared first on University Business.

Secret shoppers will be on the lookout for school strategies that inaccurately purport school costs, available student aid, completion and job placement rates, graduates’ future earning potential, and an undefined list of “other practices that may violate the laws and regulations governing an institution’s participation in the federal student aid programs.”

“Schools that engage in fraud or misconduct are on notice that we may be listening, and they should clean up accordingly,” said Kristen Donoghue, FSA’s chief enforcement officer, in the Department’s announcement. “But schools that treat current and prospective students fairly and act lawfully have nothing to fear from secret shopping.”

FSA can launch an investigation into a school based on findings from these covert measures or the findings can used to support an ongoing review. All evidence can be referred to other offices in the Department of Education and may be transferred to federal and state law enforcement.

While this initiative doesn’t discriminate against any specific type of school, it follows the Department of Education’s recent guidance that promises to offload unmet expenses at for-profit schools onto stakeholders if they’re found guilty of reckless spending. Shoppers now provide a definitive metric to assess schools. “Secret shopping is another tool in FSA’s toolbox as we expand our oversight work to hold predatory schools accountable,” said FSA Chief Operating Officer Richard Cordray.

More from UB: How Vermont is winning the fight against falling enrollment

FSA’s Enforcement Office has been going to work since its reestablishment in October 2021, issuing eight fines totaling $2.3 million, denying 10 school recertifications and issuing two terminations and five suspensions in fiscal year 2022. To improve student borrower efficacy, the Office has also partnered with the Federal Trade Commission, Consumer Financial Protection Bureau, and state attorney generals to reprimand schools that misappropriate student expenses.

“We believe federal and state officials should be partners rather than adversaries. By working together more productively, we can build a stronger system of federal student aid to help people all over this country gain easier access to the American dream,” said Cordray in a statement.

Its relationship with the Department of Veterans Affairs may be its highest priority, as evidenced by another FSA bulletin that is targeting schools taking advantage of military service members. For example, the bulletin stated how it found evidence certain schools were lying to students about how much their GI Bill would cover expenses. They would also coerce veterans into taking out loans until their GI Bill gained approval, which it sometimes never did.

With a proposed $620 million budget increase for the FSA, it will be interesting to see how much more the Department will be clamping down on schools misappropriating federal funding to make a profit off of unsuspecting students.

The post Education espionage: FSA “secret shoppers” to monitor higher ed for unethical practices appeared first on University Business.

The block comes as six Republican-led states argue the plan would cause a further economic downturn. The 8th Circuit Court of Appeals prohibited the Biden administration from “discharging any student loan debt” until the states’ emergency request has been ruled upon.

“We are pleased the temporary stay has been granted,” Nebraska Attorney General Doug Peterson said in a statement. “It’s very important that the legal issues involving presidential power be analyzed by the court before transferring over $400 billion in debt to American taxpayers.”

According to court records, debt relief was scheduled to begin on Sunday.

“According to Karina Jean-Pierre, the press secretary for the White House, the court order “does not reverse the trial court’s dismissal of the case, or suggest that the case has merit. It merely prevents debt from being discharged until the court makes a decision.”

“We continue to encourage working- and middle-class Americans to apply for debt relief,” said Cardona. “President Biden and this administration are committed to fighting for the millions of hardworking students and borrowers across the country.”

The temporary hold comes just hours after a federal judge in Missouri dismissed the six states’ case because “the Court lacks jurisdiction.”

On Thursday, President Biden’s student loan forgiveness program succeeded against two separate attempts to block the plan by one conservative group in Wisconsin and six Republican-led states.

These victories marked just the beginning of a war against a relief plan that will offer $20,000 of loan forgiveness to millions of college debt payers.

Supreme Court Justice Amy Coney Barrett, who was appointed by former president Donald Trump, promptly denied The Brown County Taxpayers Association’s emergency request to halt the policy. The group argued their right to challenge the program to save taxpayers the “staggering” blow they’ll face if the policy is approved.

In Missouri, a lawsuit brought forth by six Republican-led states was dismissed by U.S. District Judge Henry Edward Autrey, who was appointed by George W. Bush, arguing that the states lacked legal standing. “While Plaintiffs present important and significant challenges to the debt relief plan, the current Plaintiffs are unable to proceed to the resolution of these challenges,” Autrey wrote.

Six Republicans officials challenging the plan represented Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. They claim that the relief would pose economic despair as a result of lost tax revenue. Yet, Autrey argued their claims were “merely speculative.” That is the worry for nearly half of the nation’s governors, according to a joint letter signed by 22 U.S. governors to the Biden Administration in September.

“Americans who did not choose to take out student loans themselves should certainly not be forced to pay for the student loans of others,” they wrote. “At a time when inflation is sky high due to your unprecedented tax-and-spend agenda, your plan will encourage more student borrowing, incentivize higher tuition rates, and drive up inflation even further, negatively impacting every American.”

More from UB: How you can be confident that students without an SAT score will succeed at your college

On Monday, Oct. 17, Biden officially opened applications for student debt forgiveness, which already received 8 million applications during its beta launch, the Associated Press reported. “It means more than 8 million Americans are—starting this week—on their way to receiving life-changing relief,” Biden said. “In total, more than 40 million Americans can stand to benefit from this relief, and about 90 percent of that relief is going to people making less than $75,000 a year.”

He made sure to address that “not a dime” of relief will go to those who are in the top five percent of the income bracket. “I will never apologize for helping working Americans and middle-class people as they recover from the pandemic, especially not the same Republicans who voted for a $2 trillion tax cut in the last administration.”

The post Student debt relief moves ‘full speed ahead’ despite temporary block appeared first on University Business.

Emergency funds funneled by colleges and universities indeed were consequential as nearly 90% of recipients said they experienced less stress and were able to concentrate more clearly on their studies, according to a new report released by the National Association of Student Financial Aid Administrators (NASFAA), NASPA and HCM Strategists.

Beyond that, a remarkable 58% of students said it helped them remain in college, while more than half said it limited the number of hours they had to work. It also prevented them from piling $1,000 and $2,000 on top of their student loan debts. Many used the funds to both pay for items related to college and on essentials.

“The results show how even small amounts of emergency aid had a meaningful and positive impact to students, and that clearly, basic needs are still a significant concern, as a majority of student respondents indicated they used their grants on food and housing needs,” said Karen McCarthy, NASFAA vice president of public policy and federal relations.

The survey was conducted in the spring of 2022 by three organizations through 11 member institutions. They received responses from more than 18,000 students who either had received Pell grants, were borrowers, were first-generation or got financial support from family. Some of them had not been enrolled at their colleges before the pandemic. The resulting 75-page report provides a thorough, data-driven look at how Higher Education Emergency Relief funds were spent, as well as recommendations for leaders to peruse.

More from UB: Final HEERF grants go to MSIs, HBCUs and community colleges

One of those is ensuring that strong communication and messaging are being done to get the word out. Although students who did receive aid largely reported positive outcomes, the portion of non-recipients said, “they were unaware the emergency assistance was available, thought they wouldn’t qualify or didn’t know the process for receiving emergency assistance.” McCarthy noted that, “it shows how critical providing clear information about emergency aid resources is, particularly for students experiencing a financial crisis.”

How institutions have responded

When the pandemic hit, students were under duress. From the survey, almost all of them were living off campus and more than 40% lost their employment or had to incur additional medical expenses. For one-third, their financial lifelines of support tightened, too, as family members either lost jobs or saw wages reduced. So while the average amounts distributed were not massive, they were enough triage to keep many students on campus.

They spent those grants on food (61%), books (57%), and housing (50%), but they also invested in devices, paid for future tuition and everyday essentials such as transportation or utilities. The majority of those from the survey who did apply were from Minority-Serving Institutions.

In addition to the main survey, the three agencies conducted a separate questionnaire for financial aid teams who handed HEERF from 2020 through 2022, which elicited 321 responses. From the survey, there were several notable data points:

• More than half have used, or are planning to use, funds on emergency grants to students.
• In the final round, many colleges and universities saw a boost in professional judgment inquiries and requests, as well as emergency aid requests.
• Expected family contributions and Pell Grant status were among the two most frequently checked markers for distribution of funds to students. But teams also considered other potential impacts, such as housing, food and technology in their assessments.

The good news for institutions and policymakers, and perhaps something to refer back to, is that the vast majority of respondents noted that the application process was simple. Still, the organizations recommend that they communicate both the availability of programs and the eligibility requirements. They also should be “fostering communities of practice to share experiences, recommendations, and promising practices.” In addition, they must work harder to reach those who have stopped out, and potentially meet them financially without federal help. A portion of those polled said the grants did not impact their decisions to re-enroll.

“Moving forward, we hope policymakers will use the lessons learned from this work to develop permanent sources of emergency funding for students, and that those at the state and institutional levels will work to expand, improve, or develop their own emergency aid programs,” McCarthy said.

The post Report: Emergency funds saved college students from stopping out appeared first on University Business.

There couldn’t be a worse time to implement a student loan forgiveness program, and it should seriously be reconsidered: That’s the message nearly half of the nation’s governors have conveyed to President Joe Biden, who announced the cancellation of up to $10,000 in student loan debt for low to middle-income borrowers and $20,000 for Pell Grant recipients in August, stating, “Both of these targeted actions are for families who need it the most.”

In a joint letter sent to Biden yesterday, 22 governors expressed their concerns about the program arguing the burden of debt has been shifted to the taxpayer: “…we fundamentally oppose your plan to force American taxpayers to pay off the student loan debt of an elite few—a plan that is estimated to cost the American taxpayer more than $2,000 each or $600 billion total, a price the people of our states cannot afford.”

In addition, they say the plan would only worsen the economy and pose even more challenges for students. “At a time when inflation is sky high due to your unprecedented tax-and-spend agenda, your plan will encourage more student borrowing, incentivize higher tuition rates, and drive up inflation even further, negatively impacting every American.”

Over the last couple of weeks, rumors have surfaced that the GOP is preparing lawsuits to block Biden’s student debt plan.

According to the governors’ letter, President Biden simply lacks the Constitutional power to cancel student debt. “As president, you lack the authority to wield unilateral action to usher in a sweeping student loan cancellation plan, a position shared by leaders of your party,” the letter states. “Last year, Speaker of the House Nancy Pelosi (D-CA) stated, ‘People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone, he can delay, but he does not have that power. That has to be an act of Congress.'”

Senate Democrats, however, are urging the Biden Administration to expand debt relief to include parents, arguing that “Parent PLUS borrowers have been left out.”

“We write to urge you to consider Parent PLUS borrowers in any administrative changes and executive actions you undertake to improve the Department of Education’s (Department’s) student loan programs and provide student loan relief,” a letter from Senate Democrats states.

The Education Department reportedly said that Parent PLUS borrowers will qualify for $20,000 in debt relief if they were directly awarded Pell grants. Otherwise, they will be eligible for the $10,000 in relief, assuming they meet the income eligibility requirements.

More from UB: Colleges lost nearly 300,000 transfers during first two years of COVID-19 pandemic

The post Dear Mr. President: Please cut student loan forgiveness appeared first on University Business.

While that goal is included in President Joe Biden’s 2023 fiscal year budget, the threshold wouldn’t be achieved until 2029, instead incrementally gaining ground each year. If approved as is, maximum Pell grant awards would rise by $1,775 to $8,670 for the 2023-24 academic year. With inflation forcing tuition rises at some institutions, including four-year publics that are short on funding from their states, NASFAA officials said it imperative that more be done to help students in need.

“In addition to being outpaced by inflation, the maximum Pell Grant amount has failed to keep pace with increases in college costs,” the NASFAA report states. “The 2020-21 maximum Pell Grant of $6,495 covered only 26% of the average cost of attendance at a public four-year institution, while the maximum grant in 1975-76 covered more than three-quarters of the cost of attending a public four-year institution.”

Here is a quick look at some of the key numbers NASFAA released on Pell grants:

$6,895: The current maximum award for Pell Grants for this academic year. But not all students who are eligible get that award. Some receive as little as $650 depending on income levels.

6.4 million: The number of students who received Pells in 2020-21. More than 4 million of those came from families whose earnings totaled $30,000 or less.

1.33 million: Number of students whose families earned $6,000 or less in 2019-20 and received Pell grants, the highest percentage (19.83%) of any group of individuals.

58%: Percentage of Black students who were awarded Pell grants in 2015-16, outpacing all other demographic subgroups. By comparison, only 32% of White students got Pell grants. Native American/Alaska native (51%) and Latinx/Hispanic (47%) also had much higher shares.

52%: Students who received Pell aid in 2015-16 and were parents. First-generation students were at 48%, while nearly 40% of student veterans received Pell grants.

-$212: When adjusted for inflation over 10 years, Pell’s purchasing power has decreased ($6,707 in 2011-12 to $6,495 in 2021-22), while costs have risen for students.

2x: If Pell awards were doubled, it would effectively double coverage for the cost of attendance for students at every institution, including privates. So a student who attends a two-year college at an average cost of $20,000 would effectively have 62% of the cost paid for by Pell, up from 31.5% currently. A student attending and living on campus at a four-year private university at around $44,000 would have 30% paid for by Pell, up from just 15% now. Those who would really benefit would be those who attend a community college and live at home. The Pell would eclipse the cost of attendance ($11,000) at 114.9%, doubling the current amount of 57.4% coverage.

More from UB: $605 billion: New report shows the cost of Biden’s loan forgiveness, at minimum

Importantly, as NASFAA points out, “doubling the maximum Pell Grant would also expand the expected family contribution range that qualifies students for Pell, in turn extending eligibility to some additional, moderate-income students who do not currently qualify for the grant.”

While doubling Pell does not solve the potential for tuition and fee increases at some institutions, it does give more students purchasing power and the ability for lower-income students to attend more selective colleges and universities. It also would be key in reducing the nation’s student loan debt, which exceeds $1.7 trillion for borrowers.

“One of the most urgent ways we can decrease reliance on student loans is to dramatically increase investments in the federal Pell Grant program,” said Justin Draeger, president and CEO at NASFAA. “If even a fraction of the amount being spent on debt forgiveness were spent on upfront grants like Pell, many low- and middle-income students would borrow much less.”

President Joe Biden, in his Student Debt Relief plan, has proposed $10,000 in forgiveness for individuals earning less than $125,000 ($250,000 for families) and an additional $10,000 for Pell recipients. Though that will help current loan holders, it won’t assist future borrowers. They could get relief under income-driven repayment plans where they would pay no more than 5% of their incomes on student loans and have loans forgiven after 10 years of steady repayments.

The post Pell by the numbers: The power of expanding the federal grant program appeared first on University Business.

Last week’s transformative plan to lower student debt – now said to be around $1.75 trillion – was heralded by students, Democrat-leaning leaders and some philanthropic organizations happy to see $10,000 eliminated for borrowers plus an additional $10,000 more for Pell Grant recipients. Conservative leaders weren’t thrilled with it, calling it bloated and punitive for those who didn’t take out loans or had paid them off, wondering too how taxpayers would be able to absorb the immense cost. They also were highly critical of colleges and universities, particularly those with large endowments, for increasing tuition costs over the past two decades.

“President Biden’s student loan socialism is a slap in the face of every family who sacrificed to save for college, every graduate who paid their debt and every American who chose a certain career path or volunteered to serve in our Armed Forces in order to avoid taking on debt,” Sen. Mitch McConnell (R-Ky.) said in a statement following the announcement. “President Biden’s inflation is crushing working families, and his answer is to give away even more government money to elites with higher salaries.”

However, Biden has said the plan would not impact the federal budget and would help those in the working class. White House officials have had a field day on Twitter over the past few days, calling out Republican leaders such as Vern Buchanan (R-Fla.) and Marjorie Taylor-Greene (R-Ga.), who accepted large Paycheck Protection Program (PPP) handouts during the COVID-19 pandemic. Sen. Elizabeth Warren, a staunch proponent of an even larger $50,000 in relief for all 43 million borrowers, took a jab at McConnell by saying he “graduated from a school that cost $330 a year. Today it costs over $12,000. He can spare us the lectures on fairness.”

Biden also weighed in. “Some think it’s too much – I find it interesting how some of my Republican friends who voted for those tax cuts think we shouldn’t be helping these folks,” he said. “Some think it’s too little, but I believe my plan is responsible and fair. It focuses the benefit of middle-class and working families, it helps both current and future borrowers and it’ll fix a badly broken system. There is plenty of deficit reduction to pay for the programs … many times over.”

Greene responded to the retort from the White House over her PPP acceptance by telling President Biden to “go to hell.”

Inside the numbers

The initial cost of the plan in 2022 would total $486.6 billion in loan forgiveness, $16 billion in forbearances and $41.6 billion for income-driven repayment. Over the next 10 years, the government would spend between $5 billion and $6.5 billion each year on forgiveness and between $2.6 billion and $4 billion on IDR, for a total of $605.4 billion.

More from UB: Biden announces $10,000 in loan forgiveness plus $20,000 in Pell relief

The pool for those who qualify is expansive and includes those who’ve had loans and earn less than $125,000 year, plus couples making $250,000 annually. Biden has assured those who want to follow through an easy path to get forgiveness. As to forbearances, Biden pushed repayments back for the sixth time, giving borrowers a final extension until Jan. 1, 2023, when they would begin again.

One concern from Republicans that could come to fruition is that the current plan modeled by Wharton shows that these are “static assumptions” and that there is the possibility because of increases in costs or other factors that forgiveness could top $1 trillion. Income-driven repayments alone would total around $70 billion. Wharton’s model not only accounts for those who have held loans in the past but also current students, thus some of the increases from early figures that showed it would cost around $330 billion.

“The new features in the new IDR proposal could sharply increase take-up rates,” study authors, led by Penn Wharton Budget Model junior economist Junlei Chen, noted. “Even many borrowers who anticipate not being qualified in future years would typically be better off enrolling in the intermediate years in which they are qualified. There would also be financial incentives for future borrowers to shift education financing toward more borrowing to take advantage of the 5% repayment threshold. If the Department of Education simply auto-enrolled borrowers for which it had sufficient information (i.e., switched from “opt in” to “opt out”), the additional costs of the IDR program alone could reasonably exceed $450 billion.”

Lowering debt responsibility, lowering the threshold for income repayment, and increasing Pell grant awards (which got a boost to $20,000 under the Biden plan) may allay concerns over retention and enrollment in the short term and will help past borrowers. However, if colleges continue to raise tuition in response to inflation, that could eliminate any positive gains and might not impact future students.

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In addition, and with only days remaining before a reset was about to occur, Biden again paused current loan payments for 43 million Americans to Jan. 1, 2023, giving needed relief to those struggling with soaring inflation. It is the sixth time there have been extensions since the COVID-19 pandemic began, but those will absolutely end on Dec. 31, Biden said.

“Today’s announcement is about opportunity. It’s about giving people a fair shot,” Biden said. “The cost of education beyond high school has gone up significantly. States have cut back support for their state universities. Pell Grants used to cover 80% of the cost of going to a public four-year college. Today, they cover roughly 32%. Over time, that ticket has become too expensive for too many Americans. … People can start to finally crawl out from under that mountain of debt, get on top of their rent, utilities, to finally think about buying a home or starting a family or starting a business. And by the way, when this happens, the whole economy is better off.”

The late inclusion of Pell eased tension from many liberals, progressives and philanthropic groups, who were worried that the $10,000 limit would be the lone solution proposed by the administration. Sen. Elizabeth Warren (D-Mass.) and others had pushed hard for that threshold to be moved up to $50,000 per student. With that option deemed a longshot, and with Sen. Chuck Schumer (D-N.Y.) among others pressing the president to do more, a new solution was forged.

“We’ve been working towards this day for a long time, and it’s here: President Joe Biden is taking historic action to cancel up to $20,000 of debt for millions and millions of Americans,” Warren said on Twitter. “Make no mistake: This is one of the biggest acts of consumer debt relief in American history, and it will directly help hard-working people who borrowed money to go to school because they didn’t come from a family that could write a big check.”

That double bonus will allow a much more inclusive group students to gain relief, including married couples who file ($250,000 limit). Borrowers with undergraduate loans now can cap interest-driven repayments at 5% of their monthly incomes. A large portion will be freed altogether from student loan debt through a simple application process, Biden said.

“Today, 12 million American borrowers have had their educational debts erased, and millions more will be able to celebrate substantial cancellation that eases the indignity that predatory student loans have had on their lives,” said Melissa Byrne, student debt cancellation activist and executive director of We The 45 Million. “This is a historic first step, establishing the clear authority that the President has to cancel student debt. But this should just be the beginning. We need Congress to send President Biden a bill for free public college and to cancel the outstanding student loan debt that smothers the future of far too many Americans.”

More from UB: Biden dismisses $3.9 billion in loan debt for students defrauded by ITT Institute

However, that authority is likely to face legal challenges by Republicans given that no president has canceled debt in this fashion. Conservatives and economists believe the billions in aid is unwise given the tenuous economy, Biden’s previous spending packages and inflation. Republican leaders sharply criticized the $10,000 assistance plan, saying it will cost taxpayers at least $300 billion while only trimming a nominal amount of the $1.7 trillion in debt owed. (Had the $50,000 proposal happened, the cost would have risen to around $980 billion, according to a study by Penn Wharton.) They also cited a report from the Committee for a Responsible Federal Budget that showed debt elimination could offset any relief that the Inflation Reduction Act was designed to address.

“President Biden didn’t forgive student debt, he chose to shift the burden of the well-off onto the backs of the 87 percent of Americans who chose to not go to college, already paid off their loans, or saved to not take them out in the first place,” Sen. Bill Cassidy (R-La.) tweeted out Wednesday.

Though it is unclear how much of a fiscal impact the additional Pell Grant relief will have on top of the $10,000 in relief, Biden said none of it will impact the national budget or inflation, citing repeated reductions to the federal deficit during his administration.

“I will never apologize for helping working Americans, especially not to the same folks who voted for a $2 trillion tax cut that mainly benefited the wealthiest Americans and the biggest corporations,” Biden said. “Let’s be clear. I hear it all the time. How do we pay for it? We pay for it by what we’ve done. Last year, we cut the deficit by more than $350 billion. This year, we’re on track to cut it by more than 1.7 trillion by the end of this fiscal year, the single largest deficit reduction to the single year in the history of America. I understand not everyone thinks that everything I’m announcing is going to make everybody happy. ”

Republicans remained skeptical, concerned that debt forgiveness will not help those who may enter higher education in the future, as spiking tuition and fees may exacerbate ballooning loan totals, even with federal aid. Many institutions that froze tuition costs during the past two years of the COVID-19 pandemic, in fact, have increased them again because of rising inflation and may do so again in the future.

“President Biden’s student loan bailout ignores the true culprit: bloated, self-serving colleges,” Sen. Tom Cotton (R-Ark.) said. “I’ll be introducing a bill to hold these colleges accountable for debt, lower tuition, support non-college career paths, and save the taxpayers billions.”

And some talked about potential politics playing a part in the decision. “Sad to see what’s being done to bribe the voters,” tweeted Mitt Romney (R-Utah). “Biden’s student loan forgiveness plan may win Democrats some votes, but it fuels inflation, foots taxpayers with other people’s financial obligations, is unfair to those who paid their own way & creates irresponsible expectations.”

Some leaders n the right, including Warren, and those with ties to higher education were happy with the help but were hoping for more.

“We note that student loan relief without proposals for systemic reform is incomplete,” said Justin Draeger, CEO of the National Association of Student Financial Aid Administrators. “Loan forgiveness today will not help new borrowers who are enrolling tomorrow. Students and parents need meaningful changes to the student loan system, and we are encouraged that the administration is proposing steps in that direction. NASFAA has also provided a set of recommendations that we hope the Biden administration and Congress will seriously consider.”

Solving the loan debt problem?

So far, the Biden administration has provided $32 billion in loan relief, including aid to public service workers ($10 billion) and those who were victims of fraud by predatory institutions such as ITT and Corinthian ($13 billion). But this massive package is poised to top them all, by a longshot.

One of the key inclusions in the plan is not only placing a 5% cap on monthly income payments€“a reduction from the current amount of 10%€“but also relieving them from having to pay unpaid interest on top of it. Repayment plans will be streamlined to avoid future confusion about servicing companies and payments. The administration also said it was forgiving loan balances less than $12,000 for borrowers who had paid in for 10 years, instead of 20 years.

“For too many people, student loan debt has hindered their ability to achieve their dreams,” U.S. Secretary of Education Miguel Cardona said. “Getting an education should set us free; not strap us down. Today, we’re delivering targeted relief that will help ensure borrowers are not placed in a worse position financially because of the pandemic, and restore trust in a system that should be creating opportunity, not a debt trap.”

Though the current proposals offer a windfall of relief for borrowers, there is still concern about costs of postsecondary education in the future. Beyond debt reduction, what can be done to lessen the burden on borrowers?

“I do think that institutions should have substantial responsibility for student success and outcomes and that attaching student loan possibilities to student success at an institution could prove beneficial to students and the government,” said Philip Ballinger, Associate Vice Provost for Enrollment and Undergraduate Admissions at the University of Washington, said in a recent study on Best and Worst States for Student Debt published by WalletHub. “Policies should be adapted based on student demographics, for example.”

In his fiscal year 2023 budget, Biden had proposed an increase to Pell of $1,775 by 2023-24 and as much as $13,000 overall€”Double the Pell€”for borrowers by 2029. He said Wednesday he is still committed to doing that. As for the sixth extension to delay loan payments, a new study done by nonprofit ParentsTogether Action shows that if the Biden Administration had not acted again (the forbearance has been ongoing since March of 2020), half of parents would not be able to afford basic needs, including a third who could not make housing payments.

The post Biden announces $10,000 in loan forgiveness, plus $20,000 in Pell relief for borrowers appeared first on University Business.

So said U.S. Education Secretary Miguel Cardona regarding President Biden’s potential decision to forgive student loan debts on NBC’s Meet the Press on Sunday.

Now the wait is finally coming to an end as White House officials have set an announcement for Wednesday, according to a tweet from CNN released today.

The current pause on federal student loan payments is set to expire on August 31. Borrowers are patiently waiting on the President’s decision to either extend the deadline or officially forgive up to $10,000 of student loan debts for those who make under $125,000. Last week, the Biden administration also announced relief for students defrauded by ITT Institute. $3.9 billion of student loans were dismissed for 208,000 borrowers who attended the university.

“The Biden-Harris Administration will continue to stand up for borrowers who’ve been cheated by their colleges,” said Cardona.

As the August 31 deadline approaches, some are questioning the practicality of forgiving student debt amidst troubling economic times.

According to a recent CNBC survey conducted by Momentive, an AI-powered solutions company, 59% of Americans say they’re concerned that loan forgiveness will worsen inflation. Among these findings, Republicans (81%) especially believe this to be true compared to Democrats (41%).

5,142 adults participated in the study. Here are the key findings:

Forgiveness may present other hurdles

• 39% anticipate having to pay taxes on the forgiveness balance
• 33% can’t decide if borrowers should have to pay taxes on the forgiven balance
• 25% say they don’t expect a tax on the balance

Americans can’t agree on the future of loans

• 30% expect loan payments to resume after the August 31 deadline
• 29% anticipate only “some” individuals’ loans to be forgiven
• 26% say the pause on student loans will be extended
• Only 11% say all student loans will be forgiven

Additionally:

• 34% agree to offer loan forgiveness to those in need
• 32% agree all loans should be forgiven
• 30% agree that no one should have their loans forgiven

During the two year pause…

• 61% of federal student loan borrowers haven’t continued to make payments
• 20% have continued their monthly payments
• 16% have made less frequent payments

How respondents say their financial priorities have shifted during this pause:

• 51% say they’ve use the money they’ve saved for everyday expenses
• 32% say they’re paying off debts
• Only 15% have used the money to make loan payments
• 11% have saved the money altogether

More from UB: Enrollment update: Clear winners are emerging from the pack early this fall

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The borrowers had been defrauded by the now-defunct ITT from the beginning of 2005 through September 2016 with promises that their enrollments would lead to future jobs. ED also put DeVry University on notice that it will be forced to pay back $24 million to borrowers for incorrectly reporting lofty job placement rates unless it can prove otherwise on appeal. In addition, the Department dismissed student loans for some borrowers who attended medical programs at the shuttered Kaplan Career Institute’s Kenmore Square in Boston during a period from 2011 to 2012 over similar claims of inflating placement rates.

The moves are part of efforts by the Biden Administration to seek relief for borrowers who were deceived by their institutions and provide increased oversight over colleges, universities and other education programs that are not in compliance with federal guidelines and regulations. So far, the administration has spared nearly two million borrowers from having to repay nearly $32 billion.

“The automatic loan cancellation announced today will provide life-changing relief that has long been owed to former ITT students,” said Rohit Chopra, director of the Consumer Financial Protection Bureau, which sued ITT eight years ago for targeting students with expensive loans that they knew they couldn’t afford. “Far too many Americans are still on the hook for loans they acquired at colleges that profited from deceiving students, and the CFPB will continue to work with the Department of Education to address predatory student loan debt, to protect students, and to hold wrongdoers accountable.”

Historic decision

The ITT case is one of the most “pervasive” and “widespread” of all being investigated by ED. It had already approved forgiveness for 130,000 borrowers to the tune of nearly $2 billion because of its deceitful practices. Even those who did not complete their studies at ITT were granted relief from the Department.

The ED, along with the CFPB, Veterans Education Success and dozens of state attorney generals all worked together to uncover the massive fraud that occurred. From their investigations, they pulled together “tens of thousands of individual borrower defense applications submitted by former ITT students” as well as individual statements from victims, and recruiting information from the institution to show the methods used to lure students.

More from UB: Biden Administration proposes expansion of relief for student loan borrowers

“The evidence shows that for years, ITT’s leaders intentionally misled students about the quality of their programs in order to profit off federal student loan programs, with no regard for the hardship this would cause,” said U.S. Secretary of Education Miguel Cardona. “It is time for student borrowers to stop shouldering the burden from ITT’s years of lies and false promises. The Biden-Harris Administration will continue to stand up for borrowers who’ve been cheated by their colleges while working to strengthen oversight and enforcement to protect today’s students from similar deception and abuse.”

The DeVry situation is still ongoing, but its claims that 90% of its graduates would find jobs within six months – when less than 60% did – might be difficult to overcome on appeal. Kaplan’s numbers were even worse (70% claimed compared with 25% of actual job placements). According to ED, DeVry made its numbers look better by counting students who were employed before they reached completion and ignoring those who did not make the effort to search out jobs. ED said the number who may get relief could increase, and it will pursue recovery for them. If DeVry decides not to appeal, it will be subject to paying the full amount determined by ED or may be allowed to pay it back in installments.

As for the future of student loans, ED said it plans to unveil new rules regarding forgiveness that will aim to limit undue burdens on the millions who have racked up some $1.6 trillion in loan debt. As students enter the workforce, officials said the goal is to not have them contending with “mountains of debt and without the skills and preparation to find good jobs.”

So far, the Biden Administration not only has eliminated $13 billion for student victims of fraud but also has trimmed $9.6 billion for 175,000 borrowers in the Public Service Loan Forgiveness Program and cut $9 billion in payback amounts for 425,000 who are totally or permanently disabled.

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