Legal Battle Over Obama-Era Student Loan Forgiveness Law

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There’s a legal battle raging in Washington D.C. over the fate of the Obama administration’s law on student loan forgiveness. As the new president was sworn in, President Trump and Education Secretary Betsy DeVos had their own ideas for tackling student loans. It appears as if they are no advocate for the students suffering under mounds of debt.

Last month, the student loan watchdog resigned, claiming no one in Washington cares about students. Instead, the prevailing accusation is that the White House is clearly in the pocket of the big profit schools. Their evidence is DeVos hiring numerous presidents and CEOs of these schools to work in her department.

The Fight for Student Loan Forgiveness

President Trump said he would cut student loan forgiveness, and instead implement a plan that’s fairer for the taxpayers. Yet, in a compromise with Congress, decided to keep the law in place. The problem is, they haven’t really been implementing it. Instead, the Department of Education has been working under their own rules, and not the one signed by Obama.

Democratic consumer advocates and attorneys across the country fought back. They took DeVos to court for purposefully delaying the previous law and won. Yet, no one actually knows when the actual fight will be settled and Obama’s law will take place. It’s a complicated legal mess and the Republicans are fighting back.

U.S. District Judge, Randolph Moss, put his ruling on the back burner for 30 days. He did this in order to allow the Trump administration ample time to create a defense around why they’re not following the rules. They have until October 12th to create their legal defense. It will be interesting to hear what they have to say.

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Some schools are jumping into the mix as well. The California Association of Private Postsecondary Schools is fighting that the Obama-era rules are unconstitutional. There are students who went to for-profit schools also having their voices heard by the judge. With all sides getting their day in court, it will be interesting to see how the law moves forward.

Bankrupting Schools Sow Chaos in the Case

The students who get to present their case for why Obama-era laws need to be enforced were hit with some bad news. The school they attended, the New England Institute of Arts, recently declared bankruptcy. Now, the California for-profit association is saying that the students have no merit to defend the rule when their own school went bankrupt.

This can leave the Obama regulation without a visible and forceful defender in the court case. The judge needs to hear from both the schools and students the law impacts. Without a good case, we may see the beginning of the end of student loan forgiveness. Trump’s plan has always been to do away with student loan forgiveness.

Instead, their plan is to create a forgiveness platform that’s based on income. If you’re actively making money from your degree, they claim it’s unfair for taxpayers to foot the bill. You still got an education, a degree, and working a high-paying job. The Trump administration is fighting their case, saying Obama-era rules are unfair.

Still, Democrat states are having their attorney generals file lawsuits against the administration to formally intervene. Judge Moss was skeptical about allowing their testimony but allowed for the pause for both sides of the argument to create their case. We’ll learn more about this case on October 9th as the hearing moves forward.

Last modified: January 14, 2019