How Would Student-Loan Forgiveness Really Work?

"Nearly 18 months into the term of President Biden, his administration continues to grapple with whether and how to provide blanket forgiveness to the more than 40 million people who hold nearly $1.6 trillion in student-loan debt," The Chronicle of Higher Education reports.

..."But an income cap of $150,000 would exclude very few borrowers, said Justin Draeger, president and chief executive of the National Association of Student Financial Aid Administrators, and would save the government very little money.

Enforcing such a limit on loan forgiveness by income may also create bureaucratic hurdles, by requiring an application from each borrower and income verification by the Education Department.

The government cannot automatically verify borrowers’ incomes, said Draeger, because data from the Internal Revenue Service cannot be shared with other agencies unless specified by Congress.

While means-testing for loan forgiveness is a political question, Draeger said, the real issue is how the government will carry it off without placing a substantial burden on those who most need loan forgiveness and so prevent them from getting it."

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Publication Date: 6/8/2022

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