Democratic state Rep. Rep. Greg Porter of Indianapolis condemned the policy in a statement Tuesday and said he was drafting legislation to retroactively eliminate state income tax on debt relief.
The Education Department has offered to return money to people who continued to pay since the inception of the moratorium in March 2020, but the policy went largely unnoticed until last week.
Fissures opened instantly within the Democratic Party, as moderates said Biden was doing too much and liberals demanded he do more, while Republicans lined up in adamant opposition to the debt-forgiveness plan.
The plan calls for $10,000 or more in federal loan forgiveness for millions of Americans. Democrats are betting that President Joe Biden, who has seen his public approval tumble over the past year, can help motivate younger voters to the polls with the announcement.
The plan, expected to be revaled Wednesday, would likely eliminate student debt entirely for millions of Americans and wipe away at least half for millions more.
The group estimated that between 69% and 73% of any debt forgiven would accrue to households that rank in the top 60% of the U.S.’s income distribution.
Students who used federal loans to attend Carmel-based ITT Technical Institute as far back as 2005 will automatically get that debt canceled after authorities found “widespread and pervasive misrepresentations” at the defunct for-profit college chain.
Almost all the schools involved are for-profit colleges. The list includes ITT Technical Institute, which was headquartered in Carmel and shut down in 2016.
The likely decision follows months of uncertainty over the fate of student debt for tens of millions of Americans, with Biden at times sounding skeptical of canceling loans but under pressure from his collapsing approval ratings among young voters ahead of November’s elections.
White House press secretary Jen Psaki said Thursday that President Joe Biden was still considering whether to tie debt relief to borrowers’ income levels, an idea he’s floated in the past. She said it’s “certainly something he would be looking at.”
Despite fine-tuning over the years, government audits show the Education Department has provided insufficient instructions to contractors managing its loan portfolio. That oversight has resulted in inconsistent loan servicing to the detriment of borrowers.
The action applies to more than 43 million Americans who owe a combined $1.6 trillion in student debt held by the federal government, according to the latest data from the Education Department.
This is the fourth finding against Carmel-based ITT Tech that has led to the approval of debt relief claims by the department. All told, the evidence has resulted in about $660 million in discharges for roughly 23,000 students.
The Senate Education and Career Development Committee unanimously advanced a proposal Wednesday to require all high school seniors to file the Free Application for Federal Student Aid, known as the FAFSA.
Navient, a major student loan collecting company, agreed to cancel $1.7 billion in debt owed by more than 66,000 borrowers across the United States and pay over $140 million in other penalties to settle allegations of abusive lending practices.
Interest rates will remain at 0% during that period, and debt collection efforts will be suspended. Those measures have been in place since early in the pandemic, but were set to expire Jan. 31.
Navient, one of the nation’s largest student loan companies, has major operations in Fishers. About 1,400 people work in the company’s 450,000-square-foot loan servicing and data center east of Interstate 69 and north of 106th Street.
The Education Department announced Thursday it will forgive student debt for more than 100,000 borrowers who attended colleges in the now-defunct, Carmel-based ITT Technical Institute chain but left before graduating.
The Indiana Career Accelerator Fund will award financial aid to qualified students to use for training in high-demand, high-wage sectors that leads to an industry credential in six months or less.
When the Education Department approves President Joe Biden’s request, all borrowers with student loans held by the Education Department will see their payments automatically suspended until Sept. 30 without penalty or accrual of interest.
