A proposed bill in Congress would ban mass student loan forgiveness for borrowers who attended certain professional training programs, and advocates are sounding the alarm that this could be a concerning precedent.
Buried in bipartisan legislation to reauthorize appropriations for the Federal Aviation Administration is text that would prohibit the “mass cancellation” of undergraduate federal student loans for borrowers who attend flight education and training programs. This provision appears to be designed to carve out an exception under regulations for federal debt relief programs that authorize group discharges for borrowers who were impacted by certain kinds of school misconduct.
Here’s what’s going on.
Bipartisan Bill In Congress Would Ban Mass Student Loan Forgiveness For Certain Flight Training Programs
The FAA reauthorization bill is important, routine legislation to provide ongoing funding for regulating and operating the nation’s civil aviation system. But buried in the bill is this provision:
“PROHIBITION ON MASS CANCELLATION OF ELIGIBLE UNDERGRADUATE FLIGHT EDUCATION AND TRAINING PROGRAM LOANS.—The Secretary, the Secretary of the Treasury, or the Attorney General may not take any action to cancel or forgive the outstanding balances, or portion of balances, on any Federal Direct Unsubsidized Stafford Loan, or otherwise modify the terms or conditions of a Federal Direct Unsubsidized Stafford Loan, made to an eligible student, except as authorized by an Act of Congress.”
The FAA reauthorization bill is bipartisan, sponsored by two Democratic senators (Maria Cantwell of Washington and Tammy Duckworth of Illinois) and two Republican senators (Ted Cruz of Texas and Jerry Moran of Kansas).
Federal Debt Relief Programs Authorize Group Student Loan Forgiveness For Borrowers
The little-noticed ban on mass student debt relief appears to be a carve-out designed to shield flight schools from being impacted by federal student debt relief regulations. Under several programs, borrowers can receive student loan forgiveness whose school closed or engaged in certain types of misconduct. These programs include Borrower Defense to Repayment, and the False Certification and Closed School discharge programs.
New regulations enacted by the Biden administration last summer authorize the Education Department to provide group discharges in certain situations where many borrowers were impacted by the same school-related event. For False Certification discharges, a state attorney general or nonprofit legal services organization may submit a group discharge application to the Education Department. These same parties can request group student loan forgiveness requests through Borrower Defense to Repayment, although the Education Department can also initiate the process.
A federal court has enjoined the Borrower Defense regulations following a legal challenged initiated by several schools. However, the Biden administration previously authorized group discharges for borrowers who attended collapsed for-profit school chains such as Corinthian Colleges and ITT Technical Institutes.
Proposed Ban On Mass Student Loan Forgiveness Is Very Narrow, But Advocates Sound Alarm
The proposed prohibition on group-wide student loan forgiveness in the FAA reauthorization bill is very narrow, applying only to undergraduate federal Stafford loans used to attend flight education and training programs. And it appears to apply only to group discharges or “mass” student loan forgiveness; presumably, individual applications for debt relief would still be considered by the Education Department.
But group discharges are an important tool for the Education Department to be able to implement widespread relief to similarly-situated borrowers, as individual review of many applications can be extremely time-consuming. This can result in significant processing delays for borrowers applying for loan forgiveness under these programs.
Some borrower advocacy groups argue that passage of such a ban sets a precedent, and could pave the way for broader prohibitions on student loan forgiveness in the future.
“This is a test run,” warned the Debt Collective, a debtor’s union advocating for student loan borrowers, in a statement on X. “If Congress will stop debt relief for pilots now, they’ll do it to nurses tomorrow, teachers the next day and social workers the day after.”
Read the full article here
