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Student Loan Forgiveness: Biden Administration Approves Applications; Discharging Debt Made Easier!

On Thursday, the Biden administration unveiled revised regulations that will make it simpler for people who are having trouble paying their student loan debt to discharge it in bankruptcy.

The US Departments of Justice and Education have jointly released a new bankruptcy regulation that enables borrowers of federal student loans to demonstrate that they are in need of a fresh start due to financial hardship.

Discharging of Student Loan Debt

In accordance with the regulations, the agencies may suggest that a bankruptcy judge discharge a borrower’s student debt if they determine that their situation justifies it.

Right now, it’s difficult, if not impossible, for someone to discharge their federal student loan through a typical bankruptcy process. The news occurs as the White House fights to maintain the legality of its comprehensive student loan forgiveness program.

The Biden administration stopped accepting applications for its program last week after Judge Mark Pittman of the US District Court for the Northern District of Texas deemed the policy unconstitutional and overturned it. The program would have eliminated up to $20,000 in student loans for tens of millions of Americans.

26 million people filed for relief before the Education Department’s forgiveness portal was shut down. Over $1.7 trillion in student loan debt is still owed, and even before the pandemic, about 10 million borrowers were in default or delinquent.

READ MORE: Social Security Recipients To Receive Up to $3,520; Here’s Who Could Claim This Amount and When!

Biden Administration Still Approves Student Loan Forgiveness Application

student-loan-forgiveness-biden-administration
On Thursday, the Biden administration unveiled revised regulations that will make it simpler for people who are having trouble paying their student loan debt to discharge it in bankruptcy.

READ MORE: As Student Loan Forgiveness Plan Halted, Should Borrowers Resume Paying Their Debts?

Over the weekend, the Department of Education mailed letters to select borrowers of federal student loans letting them know that their requests for student loan debt relief had been granted. Even while the DOE has given approval to some of these applications, it is still unclear who would actually have their student loan debt forgiven.

Over the weekend, the Department of Education mailed letters to select borrowers of federal student loans letting them know that their requests for student loan debt relief had been granted. It is still unclear whether anyone will actually have their student loan debt forgiven, despite the DOE having granted some of these petitions.

Education Secretary Miguel Cardona admitted there are still challenges to overcome before individuals accepted for debt relief can actually receive it in a letter to those who were awarded it. After a federal judge found that the administration exceeded its jurisdiction, the Biden administration stopped enabling holders of federal student loans to request forgiveness.

Before the application process was halted, 26 million Americans had asked for forgiveness. 16 million of them had received official approval. The rising expense of education over the past few decades is cited by supporters of student loan forgiveness. When adjusted for inflation, the average tuition at a public four-year university in 2020–21 was $9,400, up from $8,500 a decade earlier.

Public universities are often much more affordable than private ones, but according to government data, the cost of attending one has doubled over the past three decades. Costs have risen over the past 40 years.

Tuition and required fees for a student attending a public institution from 2017 to 21 would amount to $38,093 in 2021 USD. A public university student in 1977–1981 would be expected to pay $10,335 in 2021 currency. Biden’s proposal is criticized as being too expensive. According to the Congressional Budget Office, it would cost the government $400 billion to cancel student loans.

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