View this email in your browser

**MAY 5, 2021**

Kuttner on TAP

New Hope for Student Debt Relief

****

With the appointment of Richard Cordray as chief of federal student loan
programs, we will now see the potential of executive power to bring
relief and end abuses. Cordray is a close ally of Elizabeth Warren and
former head of the Consumer Financial Protection Bureau.

The first best policy, of course, would be outright cancellation of up
to $50,000 per student, as proposed by Sens. Warren and Schumer. Cordray
can't make that call. President Biden needs to. But there are several
other things he can do.

For starters, there is the appalling story of management of cancellation
of debt for people who do ten years of public service. This is
authorized under the Public Service Loan Forgiveness program. But under
Trump and his education secretary, Betsy DeVos, the Education Department
did everything possible to deny this relief.

To date, just 1.26 percent of applicants have received debt relief
.
In fact, in a lawsuit brought by the American Federation of Teachers on
behalf of schoolteachers who qualified for debt cancellation, the Biden
administration has still not gotten around to reversing the Trump
position opposing the debt discharge.

Cordray could put the government on the right side of this issue and
provide cancellation for former students who earned the relief, but were
disqualified by some technicality-that was often the fault of the
for-profit servicer or the department itself.

In the case of student debtors who were duped by for-profit universities
that shut down, such as Corinthian and ITT Tech, students can get loan
cancellation only if they left the offending university within 180 days
of its closure. That deadline should be extended so that more debtors
can get relief.

There are also some 400,000 people who qualify for debt cancellation as
totally permanently disabled, as certified by the Social Security
Administration. Under DeVos, no process was put in place

to get them the relief.

More broadly, Cordray needs to reverse the Education Department's
Trump-era priority-from collecting as much money as possible to
serving the needs of students and former students now in debt. One way
to do that is to exercise much tougher oversight of the for-profit loan
servicers on contract to the department, who often give bad advice to
students in order to maximize their own profits.

Navient, one of the worst, was cited in an inspector general's report,
for improperly taking over $20 million

from the Education Department. It has contracts worth some $200 million
a year that should not be renewed. Cordray needs to revive his
office's audits and investigations unit.

Some deeper reforms, such as reduction in the interest rate to something
close to the government's own borrowing rate, as long proposed by
Warren, will take legislation (Biden should support this). Others, such
as broader cancellation, will take presidential leadership.

But the other things that Cordray can and should do, to change the
government from the role of ally of financial predators to ally of
students and debtors, is a textbook case of the potential of executive
action.

~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

Robert Kuttner's latest book is
The Stakes: 2020 and the Survival of American Democracy
.

[link removed]

A Most Admired Diplomat, Gone Corporate

Nicholas Burns, Biden's likely ambassador to China, is entangled in
tech and the arms business. BY JONATHAN GUYER

Stripping the Courts' Jurisdiction

The fundamental solution to politicized judges' power is to limit
courts' power, as the Constitution clearly permits. BY CHRISTOPHER JON
SPRIGMAN

Is Unemployment Insurance Behind the Fast-Food Labor Shortage?

In reality, it's the low pay and abysmal working conditions. BY
MICHAEL SAINATO

To receive this newsletter directly in your inbox, click here to
subscribe. 

[link removed]

 

[link removed]

 

[link removed]

 

[link removed]

 

[link removed]

 

[link removed]

 

[link removed]

YOUR TAX DEDUCTIBLE DONATION SUPPORTS INDEPENDENT JOURNALISM

Copyright (c) 2021 The American Prospect. All rights reserved.
_________________

Sent to [email protected]

Unsubscribe:
[link removed]

The American Prospect, Inc., 1225 I Street NW, Suite 600, Washington, DC xxxxxx, United States