Biden under pressure on student loans after Wolfson bankruptcy drop


President Joe Biden’s administration is facing renewed pressure to act on student debt after the Department of Education announced on Friday it would drop an appeal in a high-profile bankruptcy case involving student debt.

While the move was welcomed, advocates have long called on President Biden to do more and some senior Democrats say he has the power to forgive up to $50,000 in student debt per borrower per month. executive action.

A Delaware bankruptcy judge canceled nearly $100,000 in student loan debt held by Ryan Wolfson, a 35-year-old epileptic graduate of Penn State, in a Jan. 14 ruling.

Judge Laurie Selber Silverstein ruled that the debt imposed “undue hardship” on Wolfson.

In order to pay off their student debt through bankruptcy proceedings, the borrower must initiate “adversarial proceedings” against their student lenders and demonstrate that repayment imposes “undue hardship” on them.

On January 28, the Justice Department filed a notice of appeal on behalf of Education Secretary Miguel Cardona.

Following media coverage and some public outcry, the department announced on Friday that it would withdraw the appeal and conduct a review of its bankruptcy policies.

A spokesperson for the Ministry of Education said in a statement to Newsweek“Since day one, the Biden-Harris administration has worked hard to bring meaningful relief to student borrowers.”

“These targeted measures provided approximately $15 billion in relief to more than 675,000 borrowers, as well as tens of billions more in savings for the 41 million borrowers who benefited from the extended suspension of student loan payments,” he said. said the spokesperson.

“As we continue to provide immediate relief to borrowers struggling with debt, we are also making permanent changes that reduce debt and make college more affordable,” the statement continued.

“This January 28 notice of appeal will soon be withdrawn. The Department of Education has publicly indicated that it is reviewing current bankruptcy policies, a process that is ongoing. As long as the student loan payment suspension remains in effect, any borrower in adversarial bankruptcy proceedings may request and obtain a stay of their proceedings,” the spokesperson concluded.

The department pointed to a submission that Acting Solicitor General Elizabeth Prelogar delivered to the Supreme Court in May 2021 saying that “the Department of Education is currently reviewing this issue” of “undue hardship” as it relates to student loans.

Dan Zibel, vice president and co-founder of Student Defence, a student advocacy organization, welcomed the Department of Education’s decision in a statement to Newsweek.

“Obviously, this is good news for a borrower, and we are pleased to see the Department taking this action,” Zibel said.

“But this situation highlights how the Department must review its practices and positions on bankruptcy in student loan cases. The Department must immediately review all pending cases, including all positions taken under supervision. of Secretary Cardona,” Zibel added.

The Wolfson case has once again shed light on the Biden administration’s struggles with student debt. On the campaign trail in 2020, Biden pledged to forgive up to $10,000 in student loan debt, but has since expressed doubts that he has the power to forgive up to 50. $000 debt per borrower per executive action.

The president asked the Department of Education to prepare a memo on this in April 2021, but it was never released in an unredacted form.

The Department of Education’s raid on Wolfson’s appeal came less than two weeks after Senate Majority Leader Chuck Schumer (D-NY), Sen. Elizabeth Warren (D-MA) and others Democrats sent a letter to Biden asking him to release the memo.

The issue of student debt has dogged Biden throughout his first year in office and with members of his own party pressing the issue, the administration faces high expectations ahead of the crucial 2022 midterm elections.

President Joe Biden addresses the National Prayer Breakfast at the United States Capitol on February 3, 2022 in Washington, DC. The Biden administration is facing pressure over student loan debt following a ruling by a Delaware bankruptcy judge.
Greg Nash-Pool/Getty Images



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Christina A. Kroll