170,000 Iowans up for student debt aid if Biden plan revived

Nearly 170,000 Iowans had been fully approved for student loan relief, the White House said Friday, before the Biden administration was ordered to halt the program while lawsuits against it — including one by Iowa — go to the U.S. Supreme Court.

Administration officials say 26 million people nationwide had applied or were automatically deemed eligible to have up to $20,000 of their federal student loans canceled before an appeals court imposed an injunction stopping the plan. That included 264,000 Iowans, the White House said — and 64 percent of them already had been approved and sent to loan processors to be discharged before the order.

The department has approved 16 million applications nationwide, assuring borrowers the administration will discharge the debt if it prevails in court. Next month, the Supreme Court will hear oral arguments in two cases seeking to overturn the policy that conservatives have panned as an expensive giveaway and executive overreach.

Speaking to reporters this week, Bharat Ramamurti, the deputy director of the White House National Economic Council, defended Biden's forgiveness policy as a way to protect those most at risk of falling behind on their loans when the pause on student loan repayments brought on because of the pandemic ends.

"This action … will help ensure that those working- and middle-class borrowers are not made worse off with respect to their loans because of the COVID-19 national emergency," Ramamurti said. "Only because of Republican officials and special interests' flawed legal campaign, millions of eligible borrowers are being denied the relief that they need."

In one of the two lawsuits headed to the Supreme Court, Republican attorneys general and officials of Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina have accused the president of overstepping his authority and threatening the revenue of state entities that profit from federal student loans.

“The federal government is encroaching on our freedoms, and we will do whatever is necessary to support Iowans and defend our freedoms,” said a Jan. 3 statement from newly elected Republican Iowa Attorney General Brenna Bird, who joined several suits against the Biden administration including challenging its student loan plan.

Jordan Matsudaira, the Education Department's deputy undersecretary and chief economist, said the state attempts to derail the policy is coming at the expense of their own constituents. "Elected officials and special interests are playing politics with the lives of 26 million borrowers across America,“ Matsudaira told reporters.

The department has previously said that more than 40 million borrowers could be eligible for forgiveness, though people could opt out of the relief.

All told, the data released Friday showed the most populous states had the highest numbers of applicants or eligible borrowers, with California leading the pack with 2.3 million people, followed by Texas with 2.1 million. A pair of Texas borrowers, one who does not qualify for the full $20,000 in debt relief and one who is ineligible altogether, are at the heart of the other lawsuit heading to the Supreme Court.

The state-by-state breakdown by the White House arrives days after the Education Department released its annual report, in which auditor KPMG raised concerns with how the department calculated the cost of the debt relief policy.

The firm, which was hired by the department's inspector general for the annual audit, said the department was "unable to provide adequate evidential matter to support certain key assumptions" used to determine the price tag.

In September, the department estimated the one-time debt relief program would cost $379 billion throughout a period of over 30 years and reduce cash flow to the agency by $305 billion over the next decade. The estimates were based on the assumption that about 81 percent of eligible borrowers would take advantage of the program, but the department said at the time that the estimates were based on "highly uncertain assumptions." By comparison, the Congressional Budget Office estimated the program would cost $400 billion over 30 years based on a takeup rate of 90 percent.

KPMG expressed concern with how the department estimated the number of borrowers who will participate, saying an undercount could drive up the cost. The firm said the agency's approach was "not properly designed," a charge the department disputes.

The department stopped accepting applications in November because of the ongoing court challenges and said it has not been able to use concrete application data to demonstrate the accuracy of its estimates.

All the same, Rep. Virginia Foxx (R-N.C.), the chairwoman of the House Education Committee, pounced on the report, saying it shows "the department is blatantly lying about how much taxpayer money it is giving away." She said the department essentially made up the figures, a claim the department denies.