# data[].attributes.body
I am pursuing my degree in Student Development & Leadership in Higher Education. I am a career Financial Aid Administrator (FAA) and have served in almost every role within the Financial Aid Office, for more than twenty-five years. I am currently a Financial Aid Counselor.

I have selected for this guide the Federal Student Loan programs. I selected this topic because these programs are highly debated and with student debt increasing exponentially on an annual basis, it is clear this topic requires additional scrutiny.

# data[].attributes.body
This topic is important to FAA because we are on the front lines. We are providing guidance to students, interpreting regulations, and awarding government funding for educational expenses. Additionally, student loan defaults are monitored by the U.S. Department of Education. Sanctions to Federal Student Aid funds are imposed if a schools 3-year Cohort Default rate gets too high.

As the issue of student loan indebtedness develops, as educators we should be considering financial literacy programming on college and university campuses. There has been research that both supports and rejects financial literacy as a way to encourage students to borrow more responsibly. The federal government has not yet imposed this as a requirement to institutions participating in Title IV Financial Aid programs due to the cost associated with it. However, as this issue progresses it seems more likely that such programming will be more heavily considered.

# data[].attributes.body
The federal government has not yet reached a solution to student loan indebtedness, student loan reform recommendations have been made.

(National Association of Student Financial Aid Administrators 2022).

1. Consolidate repayment into 3 plans. Standard repayment, income driven and extended 25 year plan. Currently there are 7 repayment plans & 6 of them are based on annual income tax review.
2. Design a single income repayment plan.
3. Reform the use of interest in the federal student loan programs. Reduce interest charges, restore graduate student eligibility for Subsidized Loan funds, adjust all loans borrowed to the lower rate. Also eliminate loan interest capitalization and negative amortization for all borrowers.
4. Eliminate Student Loan Origination Fees.
5. Maintain a single loan program for graduate/professional students. Initial borrowing is available for the highest in state cost of attendance. Additional funds required to be based on credit eligibility and earnings potential within the professional field of study.
6. Reform the Parent PLUS Loan credit requirements to monitor income to debt ratio.
7. Reform the Public Service Loan Forgiveness Program, which allows forgiveness for borrowers working in non-profit professions.

https://www.nasfaa.org/uploads/documents/Recommendations_Student_Loan_Repayment.pdf

# data[].attributes.body
Student loan relief in the way of reform could positively impact millions of Americans. In a recent article Jaschik (2022) indicates the Federal Student Loan repayment pause has been widely beneficial to borrowers:

Millions of Americans have had their loan repayments paused since March 2020.

Credit scores of borrowers have improved during this pause.

Americans have been using the funds previously ear-marked for student loan repayment to pay down other forms of debt.

https://www.insidehighered.com/quicktakes/2022/03/23/study-impact-student-loan-pause

# data[].attributes.attachment_link.provider_name
Inside Higher Ed | Higher Education News, Events and Jobs

# data[].attributes.attachment_link.readable_text
A new analysis by the California Policy Lab and the Student Loan Law Initiative shows that the student loan pause improved the credit standing for most of the 26 million affected borrowers who have had their payments paused since March 2020. The analysis also projects what may happen if the pause expires in May, including that at least 7.8 million borrowers are at high risk of struggling to repay their loans.

"The pause was a key way Congress alleviated financial pressures on Americans during the pandemic, and it appears to have worked quite well," explained co-author Evan White, executive director at the California Policy Lab.

"Put plainly, the pause on student loan payments worked," said Dalié Jiménez, director of the Student Loan Law Initiative at the University of California, Irvine. "This new research shows that when people with student debt were thrown an economic lifeline by the government, they caught it-building stronger credit, paying down other debts and weathering the pandemic while limiting damage to their financial lives."

Subscribe to a Newsletter

# data[].attributes.attachment_link.description
A new analysis by the California Policy Lab and the Student Loan Law Initiative shows that the student loan pause improved the credit standing for most of the 26 million affected borrowers who have had their payments paused since March 2020.

# data[].attributes.body
Student loan borrowers are scheduled to begin repaying September 1, 2023.

During the pause interest rates were set to 0%

Delinquencies and defaults were not being reported to credit bureaus during the repayment pause.

The Education Department has developed a 1 year on-ramp to help borrowers ease back into student loan repayment.

As repayment resumes for millions of borrowers, it is projected that spending & saving habits will change dramatically.

Borrowers should:

Identify and contact their loan servicer about repayment.

Make a budget and reduce expenses.

Look for a Public Service Loan Forgiveness qualified job.

Explore Income Driven Repayment options, like the

SAVE repayment plan.

See if you qualify for forbearance or deferment options upon entering repayment.

Find additional income streams.

https://www.usnews.com/education/best-colleges/articles/the-student-loan-payment-pause-is-ending-7-things-to-do

# data[].attributes.attachment_link.readable_text
Borrowers are set to resume payments on their federal student loans Sept. 1 after more than three years of forbearance that began during the COVID-19 pandemic. The end of the payment pause comes after the Supreme Court struck down the Biden Administration's plan to forgive up to $20,000 for some of the 43 million Americans who borrowed to attend college and still owe.

It's a double hit for borrowers hoping for continued financial relief.

During the payment pause, interest rates were placed at 0%. They'll return to their current fixed rates when repayment begins. Despite the U.S. Department of Education announcing earlier this year that the payment pause, which had been extended multiple times, was coming to an end, experts say they fear some borrowers did not adequately prepare for repayment. That's particularly true for those who were counting on loan forgiveness.

With student loan repayments set to resume, "there's going to be a lot of angry people," says John Pelletier, director of the Center for Financial Literacy at Champlain College in Vermont.

Even for the most prepared borrowers, the adjustment will likely be difficult. After digesting the news of the student loan forgiveness plan being struck down, it's time for borrowers to start formulating a repayment strategy if they haven't already, says Emily Irwin, senior director of advice at Wells Fargo Bank.

"Taking action around things you can control will best prepare you financially and mentally to re-engage in the repayment of your student loans," she says.

In response to the Supreme Court's decision, the Education Department announced several plans to help ease borrowers back into repayment, including a one-year "on-ramp" during which missed, partial or late payments will not lead to negative credit reporting, default or loans being sent to collection agencies. The provisions start Oct. 1, 2023 and will last for up to 12 months, through Sept. 30, 2024.

The Biden Administration also announced it has begun the process of pursuing another federal student loan debt forgiveness plan using the Higher Education Act of 1965, which includes a necessary "negotiated rulemaking" process that involves a public hearing.

On July 14, the Education Department began notifying more than 804,000 borrowers who were on an income-driven repayment plan that at least some of their federal student loan debt will be discharged, with the process starting in the coming weeks. Some borrowers may see their entire balance wiped out.

As loan payments resume, spending and saving habits will likely have to change dramatically for many people, Pelletier says.

"Maybe they'll go out to eat less. Maybe they won't be able to take a trip next year," he says. "People are going to have lifestyle changes."

For borrowers entering repayment or beginning their student loan payments for the first time, here are seven things to do to help navigate the transition.

Identify and Contact Your Loan Servicer

During the forbearance period, several federal student loan servicers consolidated with other companies, so loans for many borrowers may be managed by a different servicer than when they last paid. Experts say borrowers should ensure they haven't overlooked or deleted emails that may have come from their new servicer regarding their student loans.

If borrowers are unsure who their servicer is now - and they may have more than one - they can find that information by logging in to the Federal Student Aid website. Experts say borrowers should then log in to their account with their servicer and confirm the accuracy of their contact information.

Servicers will likely be inundated with phone calls as repayment resumes, and CNN reported that some are cutting call-center hours. Experts say borrowers should contact servicers with questions sooner rather than later and make any necessary changes to their repayment plan.

Experts also suggest setting up automatic payments to ensure regular on-time payments.

Make a Budget and Cut Expenses

Any repayment strategy requires a budget, Irwin says. If borrowers don't have one that accounts for future loan payments, creating one is a crucial first step.

First, assess where your income is coming from and how much you can count on each month, along with any other expected sources of income, like gifts, she says. Then, calculatehow much money is going out and where it's going. After identifying fixed expenses on necessary things like rent or mortgage payments, insurance and car payments, along with variable expenses on other essentials like gas, groceries and even entertainment, identify discretionary income that's used on nonessential purchases that can possibly be cut.

"Take a very fine-tooth comb on both a monthly and an annual basis looking at those expenses," she says. "That's your baseline. That's where you're going to start with your budget."

Be sure to account for any future necessary expenses when creating a budget, Pelletier says.

"With regard to anyone just starting out, you do want to put aside money in a rainy day fund to cover three months of expenses just in case something happens like COVID, you get laid off, you have an illness or you have an auto repair that's not covered by a warranty," he says.

Look for a PSLF-Qualified Job

Though President Biden's one-time student loan forgiveness plan is off, some borrowers are eligible for loan forgiveness through various programs, like PSLF. Those who work in a qualifying job for a qualifying government or nonprofit organization for 10 years can have remaining federal loan debt forgiven as long as qualifying monthly minimum payments have been made during that time.

During the payment pause, the Department of Education also expanded eligibility for PSLF, though applications had to be submitted by Oct. 31, 2022.

Borrowers who were holding out for debt forgiveness might want to look for full-time work with a company or organization that would qualify them for PSLF. To see if an employer meets the qualifications, use the PSLF Help Tool on the FSA website.

It's also worth noting that some employers that don't qualify for PSLF might still provide student loan payment relief or benefits to help employees pay that debt, says Chris Walters, founder of GradFin, a student loan advising company.

Explore Income-Driven Repayment

Budget-conscious borrowers or those with low income may be interested in pursuing one of several income-driven repayment options, which generally equate to payments of 10% to 20% of a borrower's discretionary income to make monthly payments more affordable. There are also options for $0 monthly payments for borrowers whose income is low enough.

However, lower payments can lengthen the term of a loan, which can increase the interest amount and be more costly for borrowers, depending on their incomes over the long term. Also, when the balance on income-driven repayment plans is forgiven after 20 or 25 years, that amount is considered taxable income.

"Understand that income-driven repayment plans, while beneficial for your monthly payment, have the consequence of negative amortization, meaning you're upside down on your payment," says Bob Collins, vice president of financial aid at Western Governors University. "Your income is low enough that the amount of your payment won't even reduce your principal balance and may not cover all of your interest. In that situation, your loan balance continues to grow every time you don't reduce your principal balance."

In June 2023, Congressional lawmakers introduced a bill called the Federal Assistance to Initiate Repayment Act, which aims to stop "runaway interest" and negative amortization for those on income-driven repayment plans.

The income-driven repayment adjustment launched by the Biden Administration in July 2023, which was initially announced in April 2022, seeks to accurately account for the number of monthly payments a borrower made that qualify toward forgiveness under an income-driven repayment plan.

Borrowers are eligible for forgiveness after 20 or 25 years of qualifying months, with the number of required payments varying based on when a borrower first took out the loans, the type of loans that were borrowed and the income-driven repayment plan in which the borrower is enrolled. The Education Department says thousands of borrowers were not credited correctly for qualifying payments.

"Inaccurate payment counts have resulted in borrowers losing hard-earned progress toward loan forgiveness," the White House wrote in a July 14 press release. "This action also addresses concerns about practices by loan servicers that put borrowers into forbearance in violation of Department rules."

Borrowers who will be receiving notification of income-driven repayment adjustments from the Education Department include those with federal direct loans or Federal Family Education Loans who have met the necessary threshold for payments for any of the following periods:

Any month in which a borrower was in a repayment status, regardless of whether payments were partial or late, the type of loan or the repayment plan.

Any period in which a borrower spent 12 or more consecutive months in forbearance.

Any month in forbearance for borrowers who spent 36 or more cumulative months in forbearance.

Any month spent in deferment (except for in-school deferment) prior to 2013.

Any month spent in economic hardship or military deferments on or after January 1, 2013.

No action is required of those receiving notice of forgiveness. However, borrowers can choose to opt out of the discharge and resume regular payments by contacting their loan servicer.

See if You Qualify for Forbearance or Deferment

In situations where an income-based repayment plan is undesirable long term, deferment or forbearance may be a better option for those who qualify, Irwin says. The government will pay the interest on subsidized federal student loan payments in deferment, but borrowers are on the hook for interest with unsubsidized and PLUS loans.

Forbearance suspends loan payments, similar to a deferment, or reduces them temporarily, but interest continues to accrue. When repayment begins, the interest is added to the loan principal, called capitalization, which means the borrower will be paying interest on interest with a higher loan balance.

Borrowers should consider the announced relaxation on missed, late or partial payments by the Department of Education when deciding if deferment or forbearance is right for them.

Consider the SAVE Repayment Plan

Following the Supreme Court ruling, the Education Department also announced the creation of the Saving on a Valuable Education Plan, which will go into effect later in the summer of 2023.

This income-driven repayment plan will cut monthly payments to $0 for millions of borrowers making $32,800 or less, or $67,500 for a family of four, though those amounts are higher in Alaska and Hawaii. Borrowers who earn more than those amounts may still see $1,000 per year in savings on their payments, according to the Education Department. The plan also seeks to stop interest charges that can leave borrowers owing more than their initial loan.

For undergraduate loans, the plan will raise the amount of income that is considered discretionary income and will cut monthly payments from 10% of discretionary income to 5%. For borrowers with original loan balances of $12,000 or less, the plan will forgive loan balances after 10 years of payments instead of 20 years.

All student borrowers in repayment will be eligible to enroll in the SAVE plan before month payments are due. Borrowers who sign up or are already signed up for the current Revised Pay as You Earn plan will be automatically enrolled in SAVE once the new plan is implemented, the White House announced.

More information about the plan and its eligibility can be found on the FSA website.

Look For Extra Income Streams

For borrowers worried that their regular income might not cover the added expense of student loan payments once they resume, landing an additional job or gig position can help make up the difference and provide some breathing room.

"If you have the ability to find part-time or other full-time work, gig type of income, that will increase your cash inflow, which will make it easier for you to make these payments," Irwin says.
Trying to fund your education? Get tips and more in the U.S. News Paying for College center.

# data[].attributes.attachment_link.title
The Student Loan Payment Pause Is Ending: 7 Things to Do

# data[].attributes.attachment_link.description
Up to $20,000 in one-time loan forgiveness is off the table, and millions of borrowers are set to resume payments.

# data[].attributes.body
Constitutional Law

While there is not a constitutional amendment concerning financial aid. It is widely accepted that education is delegated to the states through (U.S. Const. amend. X) "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

This would include public education and by extension higher education. In Texas that means public junior colleges and universities.

This constitutional provision while paving the way for educational opportunity at the state level, paves the way for later legislation such as the Higher Education Act of 1969 that provides for Federal Student Aid programs, to include among other things student loans.

https://constitution.congress.gov/browse/essay/amdt10-3-4/ALDE_00013624/

# data[].attributes.body
Administrative Law

This administrative law provides for eligibility with the William D. Ford Federal Direct Loan Program. At this time this is the only valid federal student loan program.

Student Borrower Eligibility.

Need Eligibility for Subsidized Loans.

Eligibility for Unsubsidized Loans.

Internship/Residencies Eligibility.

Eligibility after Disability Cancellation.

Default, excess borrowing and overpayment.

Parent PLUS Borrower Eligibility.

Eligibility after bankruptcy.

Refusal to originate a loan by the FAA.

Institutional Eligibility/Program Participation Agreement.

Provisions like these within the administrative law provide a more defined road map to students ability to qualify for loans and other aid programs. When digging deeper into the administrative law set out by the U.S. Department of Education, we find annual limits, program limits and how colleges and universities are required to offer loan eligibility within cost of attendance projections. For example a student living on or off campus is allowed to borrow for living expenses such as rent and food. While this is reasonable, students living with family members like parents and grandparents can also borrow, regardless of gift aid like grants or scholarships.

https://fsapartners.ed.gov/knowledge-center/library/handbooks-manuals-or-guides/1998-07-22/william-d-ford-federal-direct-loan-program-eligibility

# data[].attributes.attachment_link.readable_text
Direct Loan Program borrowers and schools must meet federal AwardYear: 1997-1998
EnterChapterNo: 11
EnterChapterTitle: William D. Ford Federal Direct Loan Program
SectionNumber: 1
SectionTitle: Eligibility
PageNumbers: 3-10

eligibility requirements outlined in the law and regulations. Chapters
2 and 3 provide extensive information about those requirements.
This section highlights eligibility information for borrowers and
schools.

STUDENT BORROWER ELIGIBILITY

[[Enrollment status]]
Eligibility for a Direct Subsidized Loan or Direct Unsubsidized Loan
requires a student to be enrolled at least half time as a regular student
in an eligible program at a school participating in the Direct Loan
Program. Students may also obtain Direct Loans while enrolled in a
12-month period of preparatory coursework or in a teacher
certification program (see Section 2 for more information).

[[No FFELs and Direct Loans for same enrollment period]]
Although a postsecondary school may participate simultaneously in
the Direct Loan and Federal Family Education Loan (FFEL)
programs, a student may not borrow from both programs for
attendance at the same school for the same enrollment period.

Students without high school diplomas or recognized equivalents
may still be academically qualified and, thus, eligible for Direct
Loans. Such students must demonstrate the ability to benefit from the
instruction being offered. See Chapter 2 for detailed information on
how the student's ability to benefit is determined.

Incarcerated students and students enrolled in elementary or
secondary schools are not eligible for Direct Loans.

[[Federal Pell Grant eligibility]]
Schools that participate in the Federal Pell Grant Program must
determine Pell Grant eligibility before awarding Direct Subsidized
and Direct Unsubsidized Loans. If a student is eligible for a Pell
Grant, the school cannot originate a Direct Loan until the student has
applied for a Pell Grant for the same enrollment period. In addition,
before awarding a Direct Unsubsidized Loan, an aid administrator
must first determine whether the student is eligible for a lower-cost
Direct Subsidized Loan. Note that a school can award a Direct PLUS
Loan WITHOUT first determining whether the dependent student for
whom the parent is borrowing is eligible for a Pell Grant or Direct
Subsidized Loan.

[[Financial need]]
To qualify for a DIRECT SUBSIDIZED LOAN, a student must have
financial need, which is determined by the following formula:

Cost of Attendance (COA)
-- Expected Family Contribution (EFC)
-- Estimated Financial Aid (EFA)
----------------------------------
= Eligibility for Direct Subsidized Loans

The school establishes the COA in compliance with federal
guidelines. The EFC is calculated using financial information the
student's family provides on the Free Application for Federal Student
Aid (FAFSA), the only application a student needs to apply for
Direct Loans. The EFA includes the amount of the student's Federal
Pell Grant eligibility plus other aid the student will actually receive.

Although financial need is not considered when determining the
amount of DIRECT UNSUBSIDIZED LOANS and DIRECT PLUS
LOANS for which a borrower is eligible, the COA and EFA must be
taken into account:

COA
-- EFA
------
= Eligibility for Direct Unsubsidized Loans/Direct PLUS Loans

Proceeds from Direct Unsubsidized Loans and Direct PLUS Loans
may be used to replace the EFC for a given loan period. (The same is
true for nonfederal loan proceeds.) See Chapter 2 for detailed
information about how eligibility for the Direct Loan Program (and
the other SFA Programs) is determined using the COA, EFC, and
EFA.

[[Promissory note]]
Students must complete and sign a promissory note before receiving
their first Direct Loan disbursement. For more information on
promissory notes, see the Direct Loan School Guide.

[[Membership in religious organizations]]
As explained in Chapter 2, students who are members of certain
religious organizations are considered to have no financial need for
SFA Program purposes and are therefore ineligible for Direct
Subsidized Loans; however, these students may be eligible for Direct
Unsubsidized Loans. (Note that the parent of such a student is not
precluded from borrowing a Direct PLUS Loan for that student.) For
further details, see Chapter 2.

[[Internships/residencies]]
A student is INELIGIBLE to receive a Direct Loan while in a
medical internship or residency program. Students in DENTAL
internship programs are ELIGIBLE to receive Direct Loans.

[[Eligibility after disability cancellation]]
A student who has had a Direct Loan canceled due to total and
permanent disability may reestablish eligibility for a new loan by (1)
obtaining a statement from a physician certifying that the student can
engage in substantial gainful activity and (2) signing a statement
acknowledging that the new Direct Loan cannot be canceled because
of any impairment present when that loan is made, unless the
impairment substantially deteriorates.

[[Default, excess borrowing, and overpayment]]
Students who are in default on federal student loans, have obtained
federal student loan funds in excess of annual or aggregate loan
limits, or have received overpayments of SFA funds are not eligible
for Direct Loans or any other SFA Program funds. A student in any
of these situations can regain eligibility for SFA funds, including
Direct Loans, by repaying in full the amount owed or by taking other
steps.

- For purposes of regaining Direct Loan eligibility in cases of
default, the borrower must make "satisfactory repayment
arrangements," defined as six consecutive, voluntary, on time, full
monthly payments that are reasonable and affordable given the
borrower's financial situation. "On time" means a payment made
within 15 days of the scheduled due date. "Voluntary" payments
are those the borrower makes directly, regardless of whether a
judgment exists. Voluntary payments do not include those
obtained by income tax offset, garnishment, or income or asset
execution. For the purpose of regaining eligibility, a student may
make satisfactory repayment arrangements on a defaulted Direct
Loan only once.

- Students who have inadvertently exceeded loan limits or received
overpayments must make repayment arrangements satisfactory to
the holder of the loan or the holder of the overpayment debt.
Students who exceed Direct Loan limits, however, must contact
their Direct Loan Servicing Center to establish repayment
arrangements satisfactory to the Department.

[[Regaining eligibility during enrollment period]]
If a student regains eligibility during an enrollment period (for
example, if the sixth payment under a satisfactory repayment
arrangement is made after the start of an enrollment period), the
student regains eligibility for the entire loan period.

Chapter 2 discusses in detail overpayment, borrowing in excess of
loan limits, and regaining eligibility for SFA Programs. For more
information on the consequences of default for borrowers, see page
11-53 of this chapter.

PARENT BORROWER ELIGIBILITY

For purposes of Direct PLUS Loan eligibility, an eligible parent
borrower is a student's biological mother or father, adoptive parent,
or legal guardian. A parent also includes the spouse of a parent who
remarries, if that spouse's income and assets would be taken into
account when calculating a dependent student's EFC.

A parent must use the Direct PLUS Loan to pay for the educational
expenses of a dependent undergraduate student who meets the
requirements for an eligible student (see Chapter 2).

[[Application/promissory note]]
A parent must submit a Direct PLUS Loan application/promissory
note to the school or to the Department's Loan Origination Center,
depending on the school's origination level. A parent does not have
to complete the FAFSA unless the student for whom the parent plans
to borrow is applying for other SFA funds--or nonfederal funds--that
require the FAFSA. For more information on PLUS
application/promissory note procedures, see the Direct Loan School
Guide.

[[General eligibility requirements]]
A parent must meet the same requirements as a student applying for
SFA Program funds when it comes to citizenship status, defaults,
overpayments, and previous loans canceled due to total and
permanent disability. A parent also must comply with the
requirements for submitting a Statement of Educational Purpose (see
Chapter 2). In addition, the parent must provide his or her Social
Security Number and the student's Social Security Number.

A parent is not allowed to borrow a Direct PLUS Loan and a Federal
PLUS Loan for the same student for the same enrollment period at
the same school.

[[Adverse credit history]]
Direct PLUS Loans are not available to a parent with an adverse
credit history unless he or she obtains an endorser with no adverse
credit history or demonstrates extenuating circumstances. (See
Section 2 for more information on credit history requirements.)

ELIGIBILITY AFTER BANKRUPTCY DISCHARGE

To be eligible for SFA Program funds, including Direct Loans,
borrowers do not have to reaffirm loan or overpayment obligations
discharged in bankruptcy. The Bankruptcy Reform Act of 1994
prohibits denial of aid based solely on a bankruptcy discharge.
However, a parent borrower who wishes to receive a Direct PLUS
Loan within 5 years following a bankruptcy discharge may be
required to obtain an endorser or document extenuating
circumstances.

A federal student loan or federal grant overpayment is not
dischargeable in bankruptcy unless the debt has been outstanding for
at least seven years, excluding any periods of deferment or
forbearance, or unless the bankruptcy court has determined that
repaying the debt would cause undue hardship to the debtor and his
or her dependents.

An applicant for SFA funds who has a defaulted federal student loan
(or grant overpayment) determined NONdischargeable in the
bankruptcy filing will be considered ineligible for further federal
student aid until the default or overpayment status is resolved as
discussed on page 11-5. If a default or overpayment occurred before
the borrower's bankruptcy filing and the debt was discharged in
bankruptcy, the applicant is eligible for further federal student aid.
The applicant does not have to establish satisfactory repayment
arrangements because the debt no longer exists.

REFUSAL TO ORIGINATE A LOAN

A school may refuse to originate any Direct Loan or may originate
an amount less than a borrower's calculated need if the school

- decides on a case-by-case basis;

- does not engage in any pattern or practice that results in denying
access to Direct Loans because of a borrower's race, gender, color,
religion, national origin, age, disability status, or income;

- documents the reason for the decision and keeps that
documentation in the student's file; and

- notifies the student or parent in writing of the decision.

INSTITUTIONAL ELIGIBILITY

[[Future merger of Direct Loan and general applications]]
The Department selects schools to participate in the Direct Loan
Program, drawing from colleges, universities, graduate and
professional schools, vocational schools, and proprietary schools. To
the extent possible, the Department selects schools reasonably
representative of those participating in the FFEL Program in terms of
anticipated loan volume, length of academic program, type of
control, highest degree offered, size of enrollment, geographic
location, and default history. At the time this Handbook went to
print, schools applied to participate in Direct Loans by filling out a
separate William D. Ford Federal Direct Loan Program Participation
Application. The Department plans to eliminate the Direct Loan
application and incorporate it into the Application for Approval to
Participate in Federal Student Financial Aid Programs. Schools will
be notified when this change occurs.

To participate in the Direct Loan Program, schools must meet the
general institutional eligibility definitions and criteria described in
Chapter 3. Direct Loan schools also must meet and maintain other
requirements, as discussed below.

[[Correspondence study]]
A school offering programs EXCLUSIVELY for study by
correspondence is not eligible to participate in Direct Loans.

[[Initial participation]]
To qualify for initial participation in the Direct Loan Program, a
school must not be subject to an emergency action or a proposed or
final Limitation, Suspension, and Termination action. In addition, a
school must meet the eligibility requirements in Section 435(a) of the
Higher Education Act, including the requirement that the cohort
default rate be less than 25% for at least one of the three most recent
fiscal years for which data are available. Note that the cohort default
rate requirement is not solely an initial participation requirement. See
Section 4 for information on cohort default rate requirements.

[[Program Participation Agreement]]
To participate in Direct Loans, a school must sign an addendum to
the Department's Program Participation Agreement. The chief
executive officer signs the agreement on the school's behalf.

If schools apply as a consortium, each school in the consortium must
meet the eligibility requirements described above and must sign a
separate Program Participation Agreement.

The signed agreement obligates the school to comply with statutory
and regulatory requirements. The agreement allows schools to
participate simultaneously in the Direct Loan and FFEL programs;
however, as mentioned earlier, students may not receive loans under
both programs for the same enrollment period at the same school.

The agreement requires schools to identify eligible students, estimate
their financial need, and certify that borrowers have not exceeded
annual or aggregate loan limits. Schools also must provide timely
and accurate information to help the Department service the loans
and collect repayments. Such information includes the status of
student borrowers--and the status of students for whom parents have
borrowed--while these students are still enrolled. In addition, at the
Department's request, a school must provide any new information
about borrowers obtained after the students leave school.

Other provisions in the agreement require schools to

- refrain from charging fees of any kind for origination activities or
for providing Direct Loan information to student or parent
borrowers,

- implement a quality assurance system, and

- comply with other provisions the Department determines
necessary to protect the interests of the United States and to
promote the Direct Loan Program's purposes.

[[Requirements for Option 1 and Option 2 schools/consortia]]
Option 1 or 2 schools or consortia must meet additional criteria:

- have participated in the Federal Perkins Loan Program or the
Federal Pell Grant Program or, for a graduate or professional
school, have participated in a similar program for the three most
recent years;

- not be on the reimbursement system of payment in the Federal
Pell Grant Program;

- have had no severe performance, audit, or program review
deficiencies for any SFA Program;

- be financially responsible in accordance with the standards of
34 CFR 668.15;

- be current on program and financial reports and SFA audits for
the 12-month period immediately preceding the Direct Loan
application date;

- be current on required federal cash transaction reports and have
no final determination of cash on hand that exceeds "immediate
need";

- have no material findings in annual financial audits submitted for
the three most recent years preceding the date of application to
participate in Direct Loans; and

- provide assurance that the school has no delinquent debts to the
federal government, unless the debts are being repaid under an
arrangement satisfactory to the government or unless the
Department decides the appropriate federal agency has not
determined the existence or amount of the debts.

[[Participation for deferment purposes only]]
A school that has never participated in SFA Programs but wants to
be considered an eligible school FOR DEFERMENT PURPOSES
ONLY must prove, before it can certify deferment forms, that it
meets the Department's definition of an eligible school. For more
information about eligibility for deferment purposes, schools should
write

U.S. Department of Education
Room 3522, Institutional Participation Division
600 Independence Avenue, SW
Washington, DC 20202-5323

WITHDRAWING FROM THE DIRECT LOAN PROGRAM

A school may withdraw from the Direct Loan Program by notifying
the Department in writing at least 60 days before the planned
withdrawal date. Unless the Department approves an earlier date, the
withdrawal is effective (1) 60 days after the school notifies the
Department or (2) the date the school designates, whichever is
LATER.

Whether program withdrawal is voluntary or the result of
Department action, an SFA audit is required as is a final
reconciliation to account for all funds drawn down.

[[Loss of eligibility]]
For steps a school must take if it loses its eligibility to participate in
Direct Loans, see Chapter 3. For loss of eligibility due to high cohort
default rates, see page 11-61.

# data[].attributes.attachment_link.title
William D. Ford Federal Direct Loan Program - Eligibility

# data[].attributes.attachment_link.description
Direct Loan Program borrowers and schools must meet federal AwardYear: 1997-1998EnterChapterNo: 11EnterChapterTitle: William D. Ford Federal Direct Loan ProgramSectionNumber: 1SectionTitle: EligibilityPageNumbers: 3-10 eligibility requirements outlined in the law and regulations. Chapters2 and 3 provide extensive information about those requirements.This section highlights eligibility information for borrowers andschools.

# data[].attributes.body
Statutory Law

Under the Higher Education Act 1968, is where President Biden established his loan cancellation plan in 2022. He did so under the general powers provision of (20 USC § 1082) item 6, allows The Secretary to "enforce, pay, compromise, waive or release any right, title , claim, lien or demand..." This section of statutory law also covers:

General Powers.

Financial operations and responsibilities.

Data collection.

Sanctions upon lenders involved with federal student loans.

Review of Sanctions on Eligible Institutions.

Program of assistance for borrowers.

Rather one agrees or disagrees with President Biden's attempt to cancel student loans with limitations to the amount. It is clear something must be done at the government level to help struggling borrowers. Presently inflation is being felt across the nation while wages are frequently stagnant. With repayment soon upon borrowers, is recession on the horizon as well?

https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1082&num=0&edition=prelim

# data[].attributes.attachment_link.readable_text
§1087a. Program authority

(a) In general

There are hereby made available, in accordance with the provisions of this part, such sums as may be necessary (1) to make loans to all eligible students (and the eligible parents of such students) in attendance at participating institutions of higher education selected by the Secretary, to enable such students to pursue their courses of study at such institutions during the period beginning July 1, 1994; and (2) for purchasing loans under section 1087i-1 of this title. Loans made under this part shall be made by participating institutions, or consortia thereof, that have agreements with the Secretary to originate loans, or by alternative originators designated by the Secretary to make loans for students in attendance at participating institutions (and their parents).

(b) Designation

(1) Program

The program established under this part shall be referred to as the "William D. Ford Federal Direct Loan Program".

(2) Direct loans

Notwithstanding any other provision of this part, loans made to borrowers under this part that, except as otherwise specified in this part, have the same terms, conditions, and benefits as loans made to borrowers under section 1078 of this title, shall be known as "Federal Direct Stafford/Ford Loans".

( Pub. L. 89-329, title IV, §451, as added Pub. L. 99-498, title IV, §404, Oct. 17, 1986, 100 Stat. 1437; amended Pub. L. 102-325, title IV, §451, July 23, 1992, 106 Stat. 569; Pub. L. 103-66, title IV, §4021, Aug. 10, 1993, 107 Stat. 341; Pub. L. 103-382, title III, §358A, Oct. 20, 1994, 108 Stat. 3968; Pub. L. 110-227, §7(a), May 7, 2008, 122 Stat. 746; Pub. L. 116-260, div. FF, title VII, §702(a)(2), Dec. 27, 2020, 134 Stat. 3138.)

Amendment of Section

Pub. L. 116-260, div. FF, title VII, §§701(b), 702(a)(2), Dec. 27, 2020, 134 Stat. 3137, 3138; Pub. L. 117-103, div. R, §102(a), Mar. 15, 2022, 136 Stat. 819, provided that, effective July 1, 2024, except as otherwise expressly provided, and applicable with respect to award year 2024-2025 and each subsequent award year, as determined under this chapter, this section is amended by adding at the end the following:

(c) Maximum aid

The maximum dollar amount of financial assistance provided under this part to a student shall not exceed the cost of attendance for such student.

See 2020 Amendment note below.

Editorial Notes

Prior Provisions

A prior section 1087a, Pub. L. 89-329, title IV, §451, as added Pub. L. 90-575, title I, §141, Oct. 16, 1968, 82 Stat. 1031; amended Pub. L. 92-318, title I, §136(a), (b)(1), June 23, 1972, 86 Stat. 272, authorized appropriations for cooperative education programs from the fiscal year ending June 30, 1969, through the fiscal year ending prior to July 1, 1975, prior to repeal by Pub. L. 94-482, title I, §129(a), Oct. 12, 1976, 90 Stat. 2144, eff. 30 days after Oct. 12, 1976.

Amendments

2020-Subsec. (c). Pub. L. 116-260 added subsec. (c).

2008-Subsec. (a). Pub. L. 110-227, in first sentence, inserted "(1)" before "to make loans" and "; and (2) for purchasing loans under section 1087i-1 of this title" before period at end and, in second sentence, substituted "Loans made under this part shall" for "Such loans shall".

1994- Pub. L. 103-382 designated existing provisions as subsec. (a), added heading, and added subsec. (b).

1993- Pub. L. 103-66 amended section generally, substituting provisions relating to program authority for former provisions relating to program and payment authority.

1992- Pub. L. 102-325 amended section generally, substituting provisions relating to program and payment authority for Federal direct loan demonstration program for former provisions relating to statement of purpose of income contingent direct loan demonstration project.

Statutory Notes and Related Subsidiaries

Effective Date of 2020 Amendment

Amendment by Pub. L. 116-260 effective July 1, 2024, except as otherwise expressly provided, and applicable with respect to award year 2024-2025 and each subsequent award year, as determined under this chapter, see section 701(b) of Pub. L. 116-260, set out as a note under section 1001 of this title.

Effective Date of 1992 Amendment

Amendment by Pub. L. 102-325 effective Oct. 1, 1992, see section 2 of Pub. L. 102-325, set out as a note under section 1001 of this title.

Income Contingent Loan Distribution of Funds

Pub. L. 102-325, title IV, §452, July 23, 1992, 106 Stat. 575, provided that:

"(a) In General.-After September 30, 1992, and not later than March 31, 1992, the capital balance of the student loan fund established under part D of title IV of the Higher Education Act of 1965 [20 U.S.C. 1087a et seq.] (as such Act was in effect on the date of enactment of this Act [July 23, 1992]) shall be distributed by allowing institutions to transfer any remaining funds, including future collections and all other funds at the institution's discretion, to such institution's part E [20 U.S.C. 1087aa et seq.] account, part C [20 U.S.C. 1087-51 et seq.] fund, or subpart 3 of part A [20 U.S.C. 1070b et seq.] fund under the terms and conditions of the appropriate program.

"(b) Conversion of Existing Loans.-Institutions may, after July 1, 1992, convert all outstanding loans made under part D of title IV of the Higher Education Act of 1965 [20 U.S.C. 1087a et seq.] (as such Act was in effect on such date) to part E [20 U.S.C. 1087aa et seq.] loans, provided that such institution-

"(1) notify the borrower of such conversion;

"(2) obtain a signed part E promissory note from the borrower for the remaining amount outstanding; and

"(3) provide the borrower in writing with a description of all terms and conditions of the new loan."

# data[].attributes.attachment_link.description
There are hereby made available, in accordance with the provisions of this part, such sums as may be necessary (1) to make loans to all eligible students (and the eligible parents of such students) in attendance at participating institutions of higher education selected by the Secretary, to enable s…

# data[].attributes.body
Judicial Law

On June 30, 2023, the Supreme Court of the U.S. struck down President Biden's loan cancellation in Biden v. Nebraska. In their ruling the SCOTUS outlined the secretary cannot:

States The Secretary cannot draft new provisions to the Higher Education Act.

The Secretary cannot create a different loan forgiveness program through the waiver process.

The authority to modify should be more modest than this cancellation attempt.

Finally, the HEROES Act does not allow the Secretary’s plan without clear congressional authorization.

https://www.supremecourt.gov/opinions/22pdf/22-506_nmip.pdf

# data[].attributes.body
Ethical Principles

There are several code of conduct items that deal with student borrowing from the National Association of Financial Aid Administrators (NASFAA). However, those speaking directly to lending are pointed toward private student loans and not those available through the U.S. Department of Education.

In my opinion the most important item in this ethical principals area is with regard to consumer information. FAA are responsible for publishing information on the institutions web site outlining Direct Loan eligibility for undergraduate and graduate borrowers. The information must be clearly labeled and prominent on the web site. However, frequently this information gets inadvertently buried with web design changes. Institutions must disclose cost of attendance information as well as information on the maximum loan eligibility students can receive at both the undergraduate and graduate or professional level.

This means offering loans at less than the maximum available to students for their program of study, when combined with cost of attendance would be an ethical compromise. Especially if the institution is failing to provide information to the student clearly outlining their right to request an increase based on cost of attendance and their program level.

https://www.nasfaa.org/Code_of_Conduct

# data[].attributes.attachment_link.readable_text
The following Code of Conduct was last updated by a vote from NASFAA's Board of Directors in November 2020, and published in January 2021. Subject to enforcement procedures that went into effect July 1, 2015, NASFAA institutional members of NASFAA will ensure that:

1. No action will be taken by financial aid staff that is for their personal benefit or could be perceived to be a conflict of interest.

1. Employees within the financial aid office will not award aid to themselves or their immediate family members. Staff will reserve this task to an institutionally designated person, to avoid the appearance of a conflict of interest.

2. If a preferred lender list is provided, it will be compiled without prejudice and for the sole benefit of the students attending the institution. The information included about lenders and loan terms will be transparent, complete, and accurate. The complete process through which preferred lenders are selected will be fully and publicly disclosed. Borrowers will not be auto-assigned to any particular lender.

3. A borrower's choice of a lender will not be denied, impeded, or unnecessarily delayed by the institution, even if that lender is not included on the institution's preferred lender list.

4. No amount of cash, gift, or benefit in excess of a de minimis amount shall be accepted by a financial aid staff member from any financial aid applicant (or his/her family), or from any entity doing business with or seeking to do business with the institution (including service on advisory committees or boards beyond reimbursement for reasonable expenses directly associated with such service).

2. Information provided by the financial aid office is accurate, unbiased, and does not reflect preference arising from actual or potential personal gain.

3. Institutional financial aid offers and/or other institutionally provided materials shall include the following:

Breakdown of estimated individual Cost of Attendance components, including which are direct (billed by the institution) costs vs. indirect (not billed by the institution) costs

Clear identification and proper grouping of each type of aid offered indicating whether the aid is a grant/scholarship, loan, or work program

Estimated net price

Standard terminology and definitions, using NASFAA's glossary of terms

Renewal requirements for each aid type being offered as well as next steps and financial aid office contact information

4. All required consumer information is displayed in a prominent location on the institutional web site(s) and in any printed materials, easily identified and found, and labeled as "Consumer Information."

5. Financial aid professionals will disclose to their institution any involvement, interest in, or potential conflict of interest with any entity with which the institution has a business relationship.

Refer to NASFAA's Statement of Ethical Principles, Enforcement Procedures, as well as the Ethical Principles, Code of Conduct and Enforcement Procedures Q&A for more information about NASFAA's ethical guidelines and how they are enforced. To report a potential violation of NASFAA's Code of Conduct, refer to the Ethics Complaint Submission Form.

NASFAA is committed to helping member institutions create effective and ethically compliant financial aid offers. If you would like to have your schools' language reviewed by a NASFAA staff member to ensure it meets the Code of Conduct requirements, please complete the form below.
Aid Offer Review
Publication Date: 7/22/2021

# data[].attributes.attachment_link.description
An institutional financial aid professional is expected to always maintain exemplary standards of professional conduct in all aspects of carrying out his or her responsibilities, specifically including all dealings with any entities involved in an...

# data[].attributes.body
Recommendations/Best Practices

It is imperative that colleges and universities are proactive in educating students about their student loans. This however, means including it in curriculum and developing educational opportunities outside of the classroom such as student sessions about their loans, borrowing responsibly and how to keep interest at bay while they are enrolled.

As a Financial Aid Administrator and working with students in a counseling role. It is becoming unusual for traditional college students, those between the ages of 18 and 24 to work while pursuing their degree. While there are still  students that do, it is not as common as it once was. While I understand the desire of students to not divide their attention between employment and education. I also know that paying interest on unsubsidized loans is the best way to develop a practice of paying student loans back, building credit while still in college and keeping interest low so there is not as much risk of capitalization. Student loan interest capitalization is when the interest accruing on the loans while they are enrolled becomes part of the interest baring principle once they graduate and enter repayment.

It is pretty clear that the government will take some time to sort out student loan relief. Repayment programs are difficult to navigate and hard for students to know which one to pursue. Change is desperately needed, but the simple fact is FAA cannot wait around for the government to make those changes before acting to help students before they enter repayment.

# data[].attributes.body
Local Administrative Law

Angelo State University utilizes the attached policy and procedure for the William D. Ford Federal Direct Student Loan Program. The policy outlines:

Program Authorization & Purpose as outlined by legislation.

Program specific elements of student loan eligibility.

Need eligibility restrictions for Subsidized Student Loans.

Annual and aggregate loan limits by program of study for both undergraduate and graduate borrowers.

Limitations for both the federal direct subsidized and unsubsidized loan programs and their aggregate limits.

Entrance Counseling procedures for new borrowers.

Exit Counseling procedures for graduating students.

Eligibility for dependent undergraduate students to be eligible for additional unsubsidized awards, due to Parent PLUS credit denial.

Exemption allowances for GI Bill veteran recipients and the exemption of funding in consideration of loan eligibility.

While the policy is in need of update due to the dissolution of the Family Federal Education Loan (FFEL) program. The language within is sufficient to be transferrable to the William D. Ford Direct Student Loan Program. Policy through local administrative law provides guidance to Financial Aid Administrators in determining award eligibility for students needing to borrow for their education expenses. It would also be beneficial for this policy to refer staff members engaged in counseling students about loan eligibility to the College of Business's new iGrad program which has digital instruction, videos and knowledge quizzes on various student loan topics.

https://docs.google.com/document/d/1ScR7fZQoKYYULdNdMQ2GsUAeVbBw4D4A/edit

# data[].attributes.body
In this article Baum outlines that mass debt forgiveness proposed by President Biden's loan cancellation provisions are not the answer. Due in part to the restrictions imposed by the federal student loan programs for undergraduate students she postulates that much of the debt is carried by those with high earning potential and should not be subject to the same provisions as the needy who struggle the most with repayment of their student loans.

It is clear with student loan indebtedness being a hot topic item, that something needs to be done. For starters NASFAA has made some recommendations for student loan reforms that if enacted could provide substantial relief to borrowers. As a career financial aid administrator it is my hope that the government does something soon to reform student loans, interest, capitalization and origination fees to provide borrower relief. Otherwise I fear we will see the next bail out being in the student loan programs much as it was in the housing market in 2007-2008.

Baum, S., and Akers, B. (2021). The fallacy of forgiveness: If the feds wipe out student debt, who will benefit the most? Education Next, 21(1), 80-85.

https://www.educationnext.org/mass-debt-forgiveness-not-progressive-idea-fallacy-of-forgiveness-forum/

# data[].attributes.attachment_link.readable_text
In 2011, when the Occupy Wall Street movement called the nation's attention to the wealth-and-income gaps between the top 1 percent of the population and everyone else, activists began to promote the idea of forgiving student-loan debt. Those in the Occupy Student Debt campaign argued that all current education debt should be eliminated immediately. They asserted that policies such as limiting loan payments to an affordable share of income were "micro-cosmetic," and that creditors needed to free debtors from their "bondage."

At the time, only a small minority of people subscribed to the idea, but recently it has gone mainstream, with Democratic presidential candidates Elizabeth Warren and Bernie Sanders proposing broad student-debt forgiveness policies. To help families cope with financial pressures during the Covid-19 crisis, the Democratic Party platform calls for up to $10,000 in student-debt relief per borrower. Longer-term provisions in the platform include forgiving all debt on undergraduate tuition loans for those who earn under $125,000 and who attended public institutions. That benefit would also apply to those who hold tuition debt from attending historically Black private colleges and universities.

Democrats included a student-debt relief provision in their proposals for the Covid-19 rescue package. Ultimately, the Coronavirus Aid, Relief, and Economic Security Act of March 2020 suspended loan payments and waived interest for six months but did not include debt forgiveness. The payment waiver now extends to the end of the year.

Proponents of large-scale erasure of education debt characterize the idea as progressive, in part because such a policy, which would benefit relatively affluent people, might be financed (as Bernie Sanders proposed) by people who are even better off. Truly progressive policies, though, provide disproportionate benefits to households in the lower reaches of the income distribution. They are designed to diminish the gaps between the haves and the have-nots.

The realities of student debt in our country make it clear that proposals to eliminate these obligations do not meet the criteria for progressive policies. Households in the upper half of the income distribution hold more student debt than those in the lower half. The highest-income quartile of households owes about one-third of that debt; the lowest-income quartile owes about 12 percent. People who don't go to college don't have student debt. They have lower incomes and more constrained job opportunities than others.

There are some people who borrowed and either didn't complete their programs or never saw the anticipated earnings payoffs to the credentials they did earn. These individuals make up a large share of the low-income adults who do hold student debt. The circumstances of these borrowers explain why the government has developed an income-driven repayment system for federal student loans. The system is far from perfect, but it does not require payments until a borrower's income exceeds 150 percent of the poverty level and then generally requires payments equal to 10 percent of the borrower's income beyond that level. Those whose incomes never support affordable repayment of their debts will see their remaining balances forgiven after 20 years (or 10 years for those with public-service jobs and 25 years for those with graduate school debt).

Just 7 percent of borrowers owe more than $100,000 in student loans. This small share of borrowers owes more than one-third of the outstanding balances. Doctors and lawyers and MBAs have lots of debt, but they also tend to have high incomes. About 40 percent of federal student loans go to graduate students each year. There are strict limits on how much undergraduate students can borrow from the federal government-$31,000 total for those who are dependent on their parents and $57,500 for those who are older, married, or otherwise independent of their parents. Graduate students, though, can borrow virtually unlimited amounts.

More than one-third of borrowers owe less than $10,000. They hold just 5 percent of the outstanding student debt. Many of them are the borrowers who struggle most to pay back their loans because their limited skills restrict their job opportunities.

In short, forgiving all student debt would deliver a big windfall to a few people: those who can afford to pay. Virtually all of those with the largest debts have bachelor's degrees, and most have advanced degrees. That is not a progressive policy.

The CARES Act provided for one-time relief payments of up to $1,200 to individuals making no more than $99,000 annually. The idea of sending checks to everyone did not survive-there is an income limit. Maybe there should not be an income limit. Maybe the checks should be much bigger. But would anyone explicitly propose sending checks only to those who went to college? This would be shocking even absent the reality that highly educated workers are more likely than others to be able to work remotely. Many of the restaurant workers, taxi drivers, retail clerks, and maintenance staff who have lost their incomes did not go to college and do not have student loans. If they do have loans, they may well not have been required to make payments even before the implementation of the waiver and might eventually have their debts forgiven under existing policies.

The call to relieve each borrower of up to $10,000 in debt would be akin to sending a check in that amount only to those with outstanding student loans. Quite a few people in addition to those who never went to college would be left out under such a policy: Borrowers who have just finished repaying their loans, for instance, and students who worked long hours to avoid borrowing. Imagine college classmates from similar families who borrowed similar amounts. Student A decided to work hard to pay off all his debt before following his dream to try to make it as a musician. Student B decided to travel around the world and postpone paying her loans. Now, under loan forgiveness, the taxpayers will repay Student B's loans, but Student A, who paid back every dime on his own, will receive no such benefit.

What about borrowers who put their student-loan payments on their credit cards to avoid default? They'd be out of luck. What about those Americans who have debt from medical procedures? From utility bills? From payday loans? Or fines that accumulate when debts go unpaid?

Aside from all of these inequities, one-time elimination of student debt makes little sense if future students will continue borrowing similar amounts. Some students might even feel encouraged to borrow more in the hope that those debts, too, will be forgiven. Many advocates hope that college will become tuition free, solving this problem. But the reality is that "free" college will not eliminate borrowing for college. Public colleges are already essentially tuition free for a large share of low-income students, because Pell Grants and state grants cover those charges-but many of those students still borrow to cover living expenses. In fact, students who pay no tuition graduate with almost as much debt as those who do pay tuition.

We should forgive some student debt, such as that carried by students who borrowed for education that did not pay off or who were defrauded by their schools. We already have separate policies to deal with those issues-policies that should be simplified, improved, and carried out.

Universal forgiveness would benefit many students from relatively affluent families who attended expensive private colleges. It would also be a gift to those who borrowed for graduate school. The Congressional Budget Office recently examined the potential cost of the existing income-driven repayment plans designed to protect borrowers from unaffordable debt payments. The study found that 20 percent of those in repayment are graduate borrowers. These borrowers owe half of the funds that are now in repayment. So, half of the benefit of forgiving that debt would go to people who went to graduate school.

Wiping out the student debt of borrowers who took these loans to invest in themselves and who are reaping the benefits of their education is not a progressive policy. Most of these individuals will have increased earnings potential and a wide range of opportunities throughout their lives that would not otherwise have been available to them. The federal government is right to provide the loans that create these opportunities. Eliminating the federal student-loan program or restricting its ability to serve students who have not yet proven themselves would erode opportunities for upward mobility. The government should continue to offer student loans while ensuring that students can't use those loans at very poorly performing institutions and that borrowers don't have to make payments that would deprive them of the ability to meet basic needs.

The economic crisis wrought by the pandemic has highlighted the sad reality that too many Americans were living on the edge even before the virus hit. Some of the people now facing the most serious struggles do have student debt, and they need a lot of support-not only so they can keep up with their education debt but also, more urgently, so they can pay rent, have enough to eat, and provide for their children. The majority of student debt, however, is owed by people who are in better circumstances than most Americans.

Student-debt relief should be a targeted policy that is part of a truly progressive agenda-not a special-interest subsidy that disproportionately helps a segment of the relatively privileged.

# data[].attributes.attachment_link.title
Mass Debt Forgiveness Is Not a Progressive Idea