An All-Government Approach to Fraud Prevention and Reconciliation: Biden Loan Relief in the Days of Closing for Borrowers
The Biden administration is taking new steps to help protect borrowers from scams in the days before Americans can begin to apply for student loan forgiveness.
Officials announced “ongoing and expanded efforts across the administration to combat scams and misinformation” on Wednesday, including “educating borrowers about how to protect themselves against scams and accelerating efforts to share scam complaints with states.”
The Biden administration announced its student loan relief program in August, citing the the rising cost of attending college and the economic crisis brought on by the COVID-19 pandemic. The relief program is for low- and middle-income individuals, and includes up to $20,000 in debt cancellation for Pell Grant Recipients and up to $10,000 for non-Pell Grant recipient. Reducing monthly payments on undergrad loans is part of the proposal for debt relief which also includes loan forgiveness.
A senior administration official explained to reporters that when the process starts, borrowers will be able to apply without uploading any documents or putting their FSA ID through the portal.
“You might be contacted by a company saying they will help you get loan discharge, forgiveness, cancellation, or debt relief for a fee. Federal student aid does not require you to pay for help. Make sure to only work for the US Department of Education or our loan servicers and never reveal your account password to anyone, it said.
That will include a social media campaign and the FTC’s consumer sentinel complaint network where borrowers can report fraudulent activity via reportfraud.ftc.gov, among other efforts.
Since the relief was announced in August, the administration has released very little concrete information about what the application will look like or when it will be released. Some borrowers have already been the victims of student loan relief scam, and experts say it’s getting worse.
“This Biden forgiveness thing is Christmas, Thanksgiving and the Fourth of July all rolled into one for the scammers,” says Betsy Mayotte, the president of the Institute of Student Loan Advisors, a nonprofit that offers free counseling to borrowers.
“The release they did today is a great step,” Mayotte added. There are only two things we can do as a community to prevent fraud. One is to educate borrowers and the other is enforcement.”
We know that evil people will be trying to use the program to scam people, so it is an all-government approach.
The aim is to give relief to the hard working former students who deserve it, according to Cordray. We’re moving fast to get the application done.
Student loan forgiveness was ripe for fraud well before the Biden administration’s sweeping plans to cancel debt. According to a July report from the Tech Transparency Project, more than 10% of Google ads that popped up in searches related to student loan forgiveness were fraudulent. In the last eighteen months, the FTC has reached more than twenty five million dollars in settlements for borrowers who were promised relief on their student loan payments.
One way to avoid scam vulnerability in the first place would be to release more specific information on what the forgiveness application will look like or when to expect it.
Keeping the Jobs Out: The Biden Administration’s Debt Cancellation Program in Arizona as Supremum to the Job Creators Network Foundation
Senior officials in the administration didn’t provide any further details on when the application will go live or what process will be used.
“In one way, it’ll help,” she says. “But if I know the scammers, they’ll use that as an opportunity too: ‘The application’s out. You have to act fast. Time is short. Now that the applications are out, we can help make sure you don’t miss it. So it’s a catch-22.”
Several legal challenges to the program have been filed by the Biden administration. Supreme Court Justice Amy Coney Barrett has denied two separate requests to challenge the program.
The appeal at issue was considered an uphill battle because lower courts had ruled that the group, the Brown County Taxpayers Association, did not have the legal right or “standing” to bring the challenge. Taxpayers don’t have a general right to take on the government over how it uses taxpayer funds.
She had jurisdiction over the lower court that ruled in the case. She declined to refer the matter to the full court. Her denial appeared as a single sentence on the court’s docket.
The lawsuit brought by six Republican-led state was rejected by a federal district court judge because it did not have legal standing.
They are expected to appeal immediately. A panel of conservative judges is likely to review the case at the 8th Circuit Court of Appeals.
The Biden administration is being sued by the Arizona Attorney General and a group called the Job Creators Network Foundation.
The Biden administration’s debt cancellation program was put on hold after the 8th US Circuit Court of Appeals put an administrative hold on it.
Instead, objections to the Biden program present the classic kind of “generalized grievance” that the Supreme Court has long held federal courts lack the constitutional authority to resolve – like when a taxpayer tried to sue the CIA in an attempt to force the agency to provide a public accounting of its (allegedly unlawful) expenditures.
Autrey, who was appointed by Bush, refused to rule on the larger issue of the lawsuit. He said that the states had not suffered the kind of injuries that caused them to be in a position of strength.
The emergency application was received by Justice Amy Coney Barrett who works for the Seventh Circuit Court of Appeals. Presumably the court’s other justices agreed with her decision.
Six GOP states, which had brought the challenge to the program, got it thrown out by a federal district court in Missouri after the Supreme Court action.
The emergency request to the Supreme Court was brought by the Brown County Taxpayers Association, a Wisconsin organization made up of around 100 taxpaying individuals and business owners that advocates for conservative economic policy.
The State of Debt Relief: Applying for a Simple, Non-Governing Program that Doesn’t Allow a Loan Injunction
The organization contends that the U.S. Department of Education is acting outside of it’s authority. The Department of Education is able to manage some loan programs, but not others, and can’t forgive loans “laterally”. This power, they say, rests with Congress.
The plan has been challenged by several other conservative organizations. Those lawsuits are percolating in various lower courts, though they may face similar difficulty showing a specific harm to stay alive.
Six people negotiated the launch of the website on the day that it went live, but eight million people applied over the first weekend, compared to twenty-two million who applied during the first week. As professors of public policy, we have shared our research on how administrative burdens make vital public services harder to access with the Biden administration, and we spoke with Department of Education officials about how many people might participate in the program (though we played no role in helping design this process or the application itself). Even so, it was astonishing for us to see just how simple it is to apply for debt relief.
Setting aside the conflict over policy, the streamlined application shows what is possible when government prioritizes the public in the delivery of public services. Just a few minutes are needed to complete the form. It is available in Spanish and English, and it works on both a computer and a phone. A welcome page, a form and a confirmation page are required if you are to be eligible. Beneficiaries do not have to create an account with a password, a seemingly small step that can actually discourage people from starting. Applicants need five pieces of information: name, social security number, date of birth, phone number and email address. That’s it.
The Texas High Court Rules Protect the First Amendment Right to Debt Forgiveness and the Future of Debt Collection Laws: Comment on a Case by Mark Pittman
Two borrowers who didn’t qualify for debt relief are the focus of a lawsuit filed by a conservative group.
But the Texas federal judge found that the law does not provide the executive branch clear congressional authorization to create the student loan forgiveness program.
The program is an unconstitutional exercise of Congress’s power and must be thrown out according to Judge Mark Pittman that was nominated by President Donald Trump.
The Justice Department decided to appeal the decision and the White House press Secretary said in a statement that they disagreed with the ruling.
The department will hold onto information that has already been given by 26 million borrowers, so that they can be considered for relief once the case is over, Jean-Pierre said.
Two borrowers who are ineligible for full debt relief are challenging the decision of the education secretary to establish a forgiveness program.
They argued that they could not voice their disagreement with the program’s rules because the administration did not put it through a formal notice-and-comment rule making process under the Administrative Procedure Act.
“This ruling protects the rule of law which requires all Americans to have their voices heard by their federal government,” said Elaine Parker, president of Job Creators Network Foundation, in a statement Thursday.
Editor’s Note: Steve Vladeck is a CNN legal analyst and a professor at the University of Texas School of Law. He is the author of the upcoming book “The Shadow Docket: How the Supreme Court Uses Stealth Rulings to Amass Power and Undermine the Republic.” The thoughts expressed in this commentary are his own. View more opinion at CNN.
Part of what Pittman might be chafing against is the idea that the federal government could take any action that might be immune to judicial review (during one hearing in the case, he compared Congress’ delegation of authority to the executive branch under the relevant statute to the infamous 1933 Enabling Act in Germany). The federal government takes actions that are not allowed by courts. Indeed, it’s the conservatives on the Supreme Court who have spent much of the past 40 years tightening the requirements for standing – and making it harder for plaintiffs to challenge allegedly wrongful government action. The foundation of federal courts doctrine can be disputed by reasonable minds, but they can still dispute those precedents.
The standing of a case consists of three parts: That the injury is actually there, that it is fairly traceable to the defendants conduct, and that the court can provide some compensation for their injuries.
Although standing is not a technical doctrine, it is an important one. As Justice Samuel Alito wrote in a 2007 opinion, “No principle is more fundamental to the judiciary’s proper role in our system of government.”
Basically, the idea is that it’s not the federal courts’ job to answer hypothetical questions or resolve policy disputes. Only if a party can show how they’ve been harmed by the challenged policy in a manner that is concrete and particularized – real and discrete – will they (usually) be allowed to challenge it.
There is a matter to be decided through the political process, not the judicial one, if the complaint is that the government is acting unfairly in a way that doesn’t affect the people. The function of Congress and the Chief Executive is vindicating the public interest in Government compliance with the constitution and laws, as Justice Antonin Scalia put it 30 years ago.
There is no doubt that the student loan debt relief program has been a topic of discussion in public, and it is helpful to know that not every dispute should lead to litigation.
If Justice Alito was correct that no principle is more fundamental to the judiciary than the idea that there must be justiciable controversy between adverse parties, then that principle should prevail even against the most strenuous cases. Otherwise, the courts aren’t acting as courts; they’re just taking sides in policy debates that no one elected them to resolve.
The President’s student loan forgiveness program is currently on hold and the Supreme Court will argue in a second case in February.
Two borrowers who are not qualified for full debt relief and who say they were denied an opportunity to make a statement on the decision to give targeted student loan relief to some, brought the challenge.
The High Court Benchmark on Student Loan Borrowers Under Biden’s Plan for Community College Free During the Covid-19 Pandemic
The justices have already announced they will hear arguments in a different case this term, in a dispute brought by a group of states. The court did not say if the cases would be consolidated.
While the program was frozen while legal challenges play out, the court action Monday did not affect the state of play. It does, however, add new plaintiffs to the mix.
Biden’s program would offer up to $20,000 of debt relief to millions of qualified borrowers, but it has been met with legal challenges since it was announced.
The justices needed to hear oral arguments this term in order to be able to lift the block on the program. They agreed only to the latter request.
“This is the second of two cases in which lower courts have entered nationwide orders blocking the Secretary of Education’s plan to use his statutory authority to provide dept relief to student-loan borrowers affected by the Covid-19 pandemic,” Prelogar argued in court papers.
According to a recent Government Accountability Office report, Congress should require colleges to give students an accurate price for their education, even if they don’t know it.
After being accepted to a school, prospective college students usually get a financial aid letter. The letter lists costs as well as grant awards and federal loans for which the student is eligible.
In order to calculate the net price of attending a particular school, colleges should only include grants and scholarships, according to the government’s best practices. But about 91% of colleges understate or don’t include the net price at all in their letters.
Foxx and Rep. Lisa McClain, a Republican from Michigan, introduced legislation last week that would establish certain requirements for college financial aid offers.
The bill is one of many that aim to provide students and their families better information about the cost of college. Many of these bills, like the Understanding the True Cost of College Act, have bipartisan support but have so far failed to pass Congress.
The leader of the House Education and Labor Committee is a critic of Biden’s proposal to make college more affordable by reducing student loan debt. The Supreme Court is expected to rule by June on whether the program is legal.
Biden has said that he wants to make community college free but he can’t do that on his own as legislation didn’t pass congress last year. But lawmakers did approve a $400 increase to the maximum federal Pell grant for low-income students, raising it to $6,895 a year.
The fate of Federal Student Loan Forgiveness: The most recent accurate emails sent to borrowers and the case for the decision by the US Supreme Court
It is more difficult to discharge federal student loan debt in a court of law under the previous policy that the Department of Justice released last month.
The nine million borrowers who received the inaccurate emails have now started to receive new emails from the government correcting the error. The applications have not yet been approved or rejected.
Communication clearly and accurately with borrowers is a priority for the Department of Education and it is in close touch with an outside vendor.
Borrowers should not expect to see debt relief unless the US Supreme Court allows the program to move forward. The justices are scheduled to hear oral arguments in February, with a decision expected by June.
If the government prevails in court, the Department of Education will review more forgiveness applications, according to the most recent accurate emails sent to borrowers.
The fate of President Joe Biden’s student loan forgiveness program is in the hands of nine relatively wealthy people who graduated from elite private schools.
The justices’ salaries alone set them apart from most of the country: Chief Justice John Roberts will make $298,500 in 2023, while each of the associate justices will bring in $274,200 this year for their service. That doesn’t include any revenue from outside sources, like book deals.
Roberts, along with Justices Ketanji Brown Jackson, Neil Gorsuch and Elena Kagan all attended Harvard Law School. Justices Sonia Sotomayor, Clarence Thomas, Samuel Alito and Brett Kavanaugh went to Yale Law School. The only current justice who is not part of the Ivy club is Amy Coney Barrett, who received her law degree from Notre Dame.
Some justices received financial help to attend school. Holy Cross College gave a scholarship to Thomas to help pay for his undergraduate degree there, while the other gave a scholarship to Supreme Court Justice Antonin Scalia to help pay for his law school tuition. And they have come from different backgrounds with different politics. Thomas, for instance, grew up in poverty in Pin Point, Georgia, and is the court’s leading conservative justice.
Students who took out federal loans for undergraduate programs at private schools could be eligible for the relief. In fact, those students took out more debt than their public school counterparts in recent years and at slightly higher rates, according to data from the College Board.
“I think it’s fair to say that (the justices) didn’t live the experiences of the people that benefit from the president’s debt relief program. The Executive Director of the Student Borrower Protection Center said it was important for the justices to understand the limits of their own life experiences and how they might affect their ability to be impartial in this case.
Pierce said he’ll be looking to both Sotomayor and Jackson to pose “questions trying to tee up the experiences of the people that will benefit to help give the solicitor general the opportunity to really lay out the government’s economic rationale – the emergency that it sees and the reason that it took this big action.”