Latest news with #HigherEducationActof1965
Newsweek
24-06-2025
- Business
- Newsweek
Student Loan Update: Supreme Court Resumes Case on Debt Forgiveness
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. The U.S. Supreme Court on Monday agreed to resume a case surrounding a Biden-era student loan forgiveness rule. Why It Matters Former President Joe Biden's promises to forgive student loans to borrowers across the country faced myriad legal challenges from critics who believed he lacked authority to unilaterally forgive loans, and that taxpayers should not foot the bill for borrowers. Proponents of student loan forgiveness, however, say student loan debt has become a major burden for borrowers who are struggling to pay it off for years or even decades. Biden's rewrite of the Borrower Defense rule to make it easier for borrowers to have federal loans forgiven if schools either defrauded them or closed faced a legal challenge from Career Colleges & Schools of Texas (CCST), a trade organization. The Borrower Defense rule has been in place since 1994 but was rewritten by the Biden administration in 2022 to make the process easier for borrowers who were defrauded by a college to have those loans forgiven before a default, Forbes reported. Activists hold "cancel student debt" signs outside the White House on August 25, 2022. Activists hold "cancel student debt" signs outside the White House on August 25, 2022. STEFANI REYNOLDS/AFP via Getty Images What To Know CCST challenged the 2022 rewrite over concerns that it could harm for-profit institutions, with a judge on the Fifth Circuit Court of Appeals in 2023 blocking the rule from taking effect. But the Biden administration appeal to the U.S. Supreme Court, which has agreed to take up the case, titled Department of Education v. Career Colleges and Schools of Texas. Proceedings were paused earlier this year as the Trump administration requested more time to review the case after his return to office, but the court ordered briefings to resume on Monday, just weeks after Solicitor General D. John Sauer filed a motion making the request. Sauer wrote that Trump's Justice Department "decided to adhere to its position that the Higher Education Act permits the assessment of borrower defenses before default, in administrative proceedings, and on a group basis." On Monday, the Supreme Court granted the motion, meaning the case will resume and the court will hear oral arguments and weigh in on whether the Biden-era rule can remain. The court will consider whether or not the lower court erred in ruling that the Higher Education Act of 1965 doesn't allow for borrowers to file for borrower defense before default. Alan Collinge, founder of the organization Student Loan Justice, told Newsweek that for-profit colleges' opposition to the rules "says it all." "The majority of their students wind up in default, years of history have shown," Collinge said. "The Departments of Justice and Education should go much further than simply defending the Borrower Defense Rule in court. They should be shuttering the large majority of these scam colleges. They should have closed them down years ago, frankly. "Standard bankruptcy protections must be returned to the loans, as the right exists for all other borrowers, all other loans. Only then will the government be properly incented to crack the whip on these horrible schools." Still, Collinge said the case is "just re-arranging deckchairs on a sinking ship" and does little to address the larger issue of student loan debt for most borrowers. Most borrowers from for-profit colleges default on their loans regardless, he said. Newsweek reached out to the Department of Education and a lawyer representing Career Colleges & Schools of Texas for comment via email. What People Are Saying Former Solicitor General Elizabeth Prelogar of the Biden administration, in a petition to the court: "Taken to its logical conclusion, the court of appeals' decision would require wasteful litigation to resolve every asserted borrower defense—even when the Department and the borrower agree that the loan should be discharged—imposing significant burdens on borrowers, the Department, and the federal Judiciary. That threat and the growing backlog of unresolved borrower defense applications under the 2022 Rule impose current harms on the Department and on borrowers entitled to efficient resolution of their assertions of entitlement to relief. The Court should not permit the Fifth Circuit to continue its practice of contravening foundational equitable principles by ordering universal relief. This Court's review is warranted now." Attorneys representing Career Colleges and Schools of Texas wrote to the court: "Petitioner Department of Education raises two distinct statutory issues, neither of which involves a conflict of authority, and both of which the court of appeals decided correctly. Furthermore, this case is a poor vehicle for addressing the question of preliminary relief, as the Department seeks review of only one of several grounds of invalidation and the moribund rule is unlikely to be maintained, let alone defended by the incoming administration." What Happens Next Oral arguments have not yet been scheduled for the case but could be held as soon as the next term.
Hindustan Times
16-06-2025
- Business
- Hindustan Times
Trump's plan for federal student loan revealed: New details emerge in court documents
Newly released court documents reveal the Trump administration tried to move control of the country's $1.6 trillion federal student loan program from the Department of Education to the Treasury Department. The plan, which was being quietly developed, would have shifted responsibility for managing and collecting student loans—a job traditionally handled by the Education Department's Federal Student Aid (FSA) office. That effort was paused after a federal judge blocked broader attempts to restructure the Education Department. The federal student loan system affects over 42 million Americans. Moving oversight to another agency could change how payments are collected, how borrowers are protected, and how the system is regulated. With more borrowers falling behind on payments and credit scores dropping, pressure is rising on the government to manage the system better. The court ruling keeps the current setup in place, at least for now, but future legal or political changes could shift the system in major ways. Also Read: Trump mulls expanding US travel ban to 36 more countries | Full list According to court filings, the Department of Education, under Trump, had been working on an agreement with the Treasury to review how federal student loans are managed. Rachel Oglesby, the department's chief of staff, confirmed this in a court filing on Tuesday. Nine Education Department staffers were also scheduled to move to the Treasury to help review loan collections. That plan was stopped after US District Judge Myong Joun issued a ruling last month. The judge also ordered the Education Department to rehire over 1,300 workers laid off earlier this year and blocked efforts to shift loan oversight to the Small Business Administration (SBA). The ruling keeps the federal student loan program under the Education Department's control. It also prevents any transfers of authority to other agencies without Congress getting involved. Some policy experts argue the Treasury has more experience handling public funds than the SBA, but say a move like this would still require a change in law. Under the Higher Education Act of 1965, loan management must stay within the Federal Student Aid office. A past Treasury pilot program from 2014 to 2015 tried collecting defaulted student loans but brought in less money than private collection firms. Other proposals to link student loan payments to wages have also faced problems tied to income tracking and privacy rules. Meanwhile, student loan debt is becoming a growing problem. The pandemic-related pause on loan payments has ended, and many borrowers are struggling to catch up. Between January and March 2025, nearly six million borrowers were 90 days or more behind on payments or in default, according to the Federal Reserve Bank of New York. Many saw large drops in their credit scores, which could make it harder to qualify for mortgages, car loans, or other types of credit.
Newsweek
12-06-2025
- Business
- Newsweek
Student Loan Update: Court Documents Reveal Details of Trump Admin Plans
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Court documents have revealed new details about the Trump administration's attempts to transfer the management of the country's $1.6 trillion student loan portfolio away from the Department of Education. The documents, submitted to a federal court, showed that the Department of Education had been negotiating a deal with the Treasury to oversee federal student loans, a role historically managed by the department's Federal Student Aid office. The plan was put on hold after a federal judge blocked the administration's broader efforts to dismantle the Department of Education. Newsweek reached out to the Treasury Department for comment. Why It Matters The potential transfer of the federal student loan portfolio, which affects more than 42 million Americans, has significant implications for borrowers, government oversight and loan servicing standards. With student loan delinquency on the rise and millions of Americans seeing their credit scores hit record lows, the debate over who manages repayment, collections, and borrower protections has reached a new urgency. Court intervention has preserved the Department of Education's central role for now, but ongoing legal and policy battles could reshape loan management for years. President Donald Trump speaks at a roundtable event at the White House on June 9, 2025. President Donald Trump speaks at a roundtable event at the White House on June 9, To Know Under the Trump administration, the Department of Education had been negotiating a memorandum of understanding with the Treasury Department to review student loan management and collections operations, Rachel Oglesby, chief of staff at the agency, confirmed in a late Tuesday court filing. Nine Education Department employees were set to move from the Federal Student Aid Default Collections Unit to the Treasury to "discuss collections activities," the Education Department confirmed to Newsweek. Those plans were halted after U.S. District Judge Myong Joun in Boston ruled last month, ordering the rehiring of more than 1,300 Education Department employees affected by mass layoffs in March and blocking the transfer of loan management to the Small Business Administration (SBA). The court's intervention kept existing federal student loan programs under the purview of the Department of Education, restricting the administration from shifting responsibilities to other agencies without congressional approval. Some experts have said that while the Treasury Department is more experienced than the SBA in managing collections and public funds, shifting federal student loan management would demand legislative action. The Higher Education Act of 1965 stipulates that loan responsibilities are assigned to the Federal Student Aid within the Department of Education. The Treasury's 2014-2015 pilot program for collecting defaulted student loans reportedly yielded lower returns than private collection agencies. Proposals to integrate student loan repayments with wage withholding systems have also faced complications due to income-reporting and privacy limitations. As policy debates continue, the end of the pandemic-era federal loan payment pause contributed to a surge in late payments and defaults. The Federal Reserve Bank of New York reported that nearly six million borrowers were 90 or more days delinquent or in default between January and March 2025, with many experiencing steep drops in credit scores. These credit impacts may hinder access to mortgages, car loans and other financial products. What People Are Saying Madi Biedermann, deputy assistant secretary for communications at the Department of Education, told Newsweek: "The Department of Education signed an Interagency Agreement with the Department of Labor on May 21 regarding administration of certain career, technical, and adult education grants. The Workforce Development Partnership will allow ED and DOL to better coordinate and deliver on workforce development programs and strengthen federal support for our nation's workforce, a top priority of the Trump Administration. "This is one of many existing agreements ED has with other agencies to collaborate on services for the American people. As acknowledged in the status report, ED has paused implementing this IAA while we seek relief from the district judge's preliminary injunction." Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "The Trump administration is largely restricted from making sweeping changes here. Dismantling a federal agency like the Department of Education requires an act of Congress. So while they've made noise about shutting it down, the real impact has been around restarting payments and rolling back deferment and forgiveness programs." Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "The proposal for the Treasury to take over the federal administrative responsibilities for student loans is no surprise, as this was a change largely discussed when the administration started ramping up its planning to shutter parts of the Department of Education. For student loan borrowers, if the plan was ever to take effect, it would more than likely not mark a substantial change to their current payment plans." What Happens Next The status of federal student loan management—and who ultimately oversees the $1.6 trillion portfolio—remains unresolved pending further court action and any potential congressional intervention. "It would just be the shift from one department overseeing the debt to another. At the same time, this proposal becoming a reality is something that may increasingly not occur," Beene said. "Disbanding and relocating aspects of the Department of Education would require congressional involvement, and there's already signs of hesitation to supporting such." Borrowers are advised to continue routine payments as legal and policy outcomes develop.
CNBC
27-05-2025
- Business
- CNBC
Court order challenges Trump's plan to move federal student loans to Small Business Administration
A federal judge's recent order may foil President Donald Trump's plans to transfer the country's more than $1.6 trillion student loan portfolio from the U.S. Department of Education to the Small Business Administration. U.S. District Judge Myong J. Joun wrote in his May 22 preliminary injunction that the Trump administration was required to reinstate over 1,300 Education Dept. employees and was blocked from carrying out Trump's directive "to transfer management of federal student loans and special education functions out of the Department." In other words, federal student loans will stay with the Department of Education, for now. Trump had announced on March 21 a plan to transfer over 40 million student loan accounts to the SBA. "They're all set for it," the president said of the SBA at the time. "They're waiting for it." More from Personal Finance:House Republican bill calls for bigger child tax creditStudent loan borrowers in default may see 15% of Social Security benefit garnishedHow college savers can manage 529 plans in a turbulent market Madi Biedermann, deputy assistant secretary for communications at the Education Department, slammed the judge's decision. "Once again, a far-left Judge has dramatically overstepped his authority, based on a complaint from biased plaintiffs, and issued an injunction against the obviously lawful efforts to make the Department of Education more efficient and functional for the American people," Biedermann wrote in a statement to CNBC on Thursday. The Trump administration requested the order be stayed pending an appeal of the decision. The development that student loans will remain in the Education Dept. for now is good news for borrowers, said Sarah Sattelmeyer, a project director at New America and senior advisor under the Biden administration. "Instead of increasing efficiency, the movement of the Department's core functions would have increased confusion and decreased the effectiveness of programs that students depend on to access education," Sattelmeyer said. Consumer advocates are worried that a mass transfer of accounts between federal agencies could trigger errors, or compromise federal student loan borrowers' privacy. Those problems have occurred during much smaller transfers between loan servicers. Advocates also raise concerns about how a change in agency might affect borrower protections and programs such as Public Service Loan Forgiveness. The Small Business Administration has no experience relevant to the management of federal student loans, said higher education expert Mark Kantrowitz. It would ultimately require an act of Congress to move the loan portfolio to the SBA, Kantrowitz said. The Higher Education Act of 1965 spells out that that the Education Department's Federal Student Aid office is responsible for the debt, he said. Adding to advocates' criticism over Trump's proposed transfer was his administration's announcement in March that the SBA's workforce would be reduced by 43% — leaving fewer people to manage this new responsibility.
Los Angeles Times
18-05-2025
- General
- Los Angeles Times
Opinion: Education is a right, has America done enough to make it one?
When nearly 40% of high school graduates from the wealthiest nation in the world don't pursue college, the question arises: What are we doing to ensure that education is a right for all, not a privilege for a few? Financial barriers are the largest obstacle to accessing higher education in America. A study from 2023 found that 55% of adults without a college degree cited program cost as the top reason for not enrolling. To understand why so many young people are left behind, we must look at the history of higher education in the United States. American colleges originated as a privilege reserved for wealthy white men. In the early 17th century, institutions like Harvard, Yale, and Princeton were founded to train future clergy and civil leaders and were not meant to serve the general public. But change began in the mid-19th to early 20th centuries. The G.I. Bill, passed in 1944, represented a turning point in education by granting lower socioeconomic groups with funds for education and loans. For the first time, individuals from working-class backgrounds, rural areas, inner cities, and first-generation immigrant families could pursue doors to education that were previously closed. The reality of financial aid being an important asset to many high school seniors is echoed by Esha Wooten, a graduate of Penn Foster College. 'Without the financial aid provided as a result of filling out a FAFSA year after year, I wouldn't be a senior in college right now,' she said. More financial aid and scholarships for education have become available today through federal programs such as the Higher Education Act of 1965 and the Pell Grants. Yet, despite these changes, the vision of education as a universal right remains only partially fulfilled in America. Recent data emphasizes the persistent crisis of pursuing higher education. College enrollments declined by 5% in 2024 compared to the previous year, with four-year colleges seeing drops of over 6%. Moreover, in 2023, 89% of students from top quintile families — the highest-earning 20% of households — attended college, while just 64% of students from middle quintile families and 51% from lower quintile families did the same. This trend is supported by the fact that students in the top socioeconomic quintile are three times more likely to enroll in a four-year institution than those from the lowest quintile, despite similar academic preparation. These data reveal the ugly truth: socioeconomic differences play a major role in deciding who gets to pursue higher education. While America has shifted to provide more opportunities for higher education, equity in educational pursuit has still not been met. To make education a right for all, we must focus on better affordability. This means reforming financial aid systems, such as increasing funding for need-based financial aid programs and even simplifying processes like FAFSA applications to make them more accessible. If we are serious about advancing the promise of higher education, we must take immediate action to make it fair. America can no longer afford to deny the next generation the education they deserve: education is a right, and more needs to be done to make it one. Related
