A bipartisan Senate bill to reauthorize funding for the FAA would also ban bulk student loans … [+]
A bill proposed in Congress would ban mass student loan forgiveness for borrowers who participated in certain job training programs, and advocates are sounding the alarm that it could set a troubling precedent.
Buried in a non-partisan way laws The reauthorization of funds for the Federal Aviation Administration is text that might prohibit the “mass cancellation” of federal student loans for borrowers participating in flight training and teaching programs. This provision appears intended to create an exception to the principles governing federal debt relief programs that authorize group relief for borrowers who’ve been affected by certain varieties of school misconduct.
Here’s what is going on on.
Bipartisan bill in Congress would ban mass student loan forgiveness for certain flight training programs
The FAA reauthorization bill is significant, routine laws to supply ongoing funding for the regulation and operation of the nation’s civil aviation system. But buried within the bill is the next provision:
“BAN ON MASS DISRUPTANCE OF ELIGIBLE LOANS FOR UNDERGRADUATE AVIATION EDUCATION AND TRAINING PROGRAMS. – The Minister, the Secretary of the Treasury or the Attorney General shall not take any action to cancel or forgive the outstanding balances or portions of the balances of a Federal Direct Unsubsidized Stafford Loan or otherwise alter the terms and conditions of a Federal Direct Unsubsidized Stafford Loan that to an eligible student unless authorized by an Act of Congress.”
The FAA reauthorization bill is bipartisan and is supported 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 an exception designed to guard flight schools from the consequences of federal student debt relief regulations. Several programs allow borrowers whose school has closed or committed certain varieties of misconduct to receive student loan forgiveness. These programs include Borrower Defense Pending Repayment, in addition to the False Certification and Dismissal from Closed Schools programs.
New regulations issued last summer by the Biden administration authorize the Department of Education to grant group discharges in certain situations where many borrowers were affected by the identical school-related event. For dismissals on account of false certification, an attorney general or nonprofit legal services organization may file a collective dismissal petition with the Department of Education. The same parties can file group applications for student loan forgiveness through Borrower Defense Pending Repayment, although the Department of Education also can initiate the method.
A federal court adopted the borrower defense provisions following a lawsuit brought by several schools. However, the Biden administration previously approved group layoffs for borrowers who attended collapsed for-profit school chains comparable to Corinthian Colleges and ITT Technical Institutes.
The proposed ban on mass student loan forgiveness could be very narrow, but advocates are sounding the alarm
The proposed ban on corporate student loan forgiveness within the FAA Reauthorization Act could be very narrow and applies only to federal student Stafford loans used to take part in flight education and training programs. And it only seems to use to group layoffs or “mass” student loan forgiveness; Presumably the Department of Education would proceed to think about individual applications for debt relief.
However, group releases are a vital tool for the Department of Education to supply extensive relief to similarly situated borrowers, as reviewing many applications individually may be extremely time-consuming. This may end in significant processing delays for borrowers applying for loan forgiveness under these programs.
Some borrower advocacy groups argue that passing such a ban sets a precedent and will pave the way in which for broader bans on student loan forgiveness in the longer term.
“This is a test run,” the Debt Collective, a debt group that advocates for student loan borrowers, warned in a single Statement about X. “If Congress stops debt relief for pilots now, it will do it tomorrow for nurses, the day after that for teachers, and the day after that for social workers.”
