President Biden has signed numerous executive orders recently related to student loan forgiveness. The Borrower Defense to Repayment Program, according to a recent article published in Forbes, will allow forgiveness to certain student loan recipients who were defrauded by the colleges or institutions in which they enrolled. This program was enacted by executive order in June 2021.
A second executive order, on August 6, 2021, provided for an extension on a previous moratorium providing borrowers were not to be charged federal loans payments, interest, and not be subject to collection efforts on such loans until January 31, 2022. Previously, such a moratorium was to end in September of 2021.
Furthermore, another executive order, on August 19, 2021, provided for the automatic discharge or forgiveness of student loans for disabled borrowers. This executive order was labeled the Total and Permanent Disability Program, and according to Forbes, would provide forgiveness for over 300,000 borrowers, and almost $6 billion dollars in student loan debt.
Finally, the Department of Education on August 20, 2021, proclaimed that it would forgive any interest on student loans to military service members who were entitled to such a waiver, whether or not such waiver was given.
There have also been numerous bills introduced in Congress that would provide forgiveness of certain private student loans. None of these bills have been enacted into law. Furthermore, such efforts raise serious Constitutional issues and issues relating to the sanctity of contracts, as such student loans are made by contract between a private individual and lenders, who are presumably private in nature.
For disabled borrowers, adjudged disabled, and receiving social security disability, the forgiveness of student loans has been long available. I have advised numerous clients who are recipients of social security disability who also possess student loans debt of the process by which they can receive forgiveness.
However, this process has become more burdensome and difficult in the past number of years. Automatic forgiveness of student loans for disabled borrowers would obviously provide an easier avenue for student loan recipients, provided the program operates as advertised.
The process of bankruptcy already provides for the discharge of student loans for borrowers who were defrauded by colleges or institutions in which the students matriculated. Bankruptcy Code Section 523(a)(8) provides for the discharge of student loans for borrowers who did not receive an “educational benefit”. A student who was the victim of fraud by such a college or higher educational institution can clearly argue that such a benefit was not received.
However, in order to receive a discharge in bankruptcy, the borrower would need to file an adversary proceeding. Such effort is complicated and generally would require the representation of a competent and experienced bankruptcy attorney.
When such executive orders or decrees are delivered, the reader must be careful and wary of the information given. Often the process is difficult and complicated for those seeking forgiveness or relief, and often many borrowers who may think they are eligible for such relief, may not be eligible. There are professionals who specialize in helping those with student loans. As a bankruptcy attorney who has represented many thousands of clients for more than 27 years, I have a certain experience in such issues. If you, the reader, are encumbered by student loans, there may be options and my office will gladly assist.
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