The Trump administration is considering ways to help Americans with their student-loan debt, according to senior administration officials, including by refinancing loans at lower interest rates and eliminating debt in bankruptcy, the Wall Street Journal reported. President Trump has asked advisers for a plan that would rely on policy changes at the Education Department, which oversees federal student-loan lending, and possibly Congress. It would counter student-debt-forgiveness proposals by some Democratic presidential contenders. Sen. Bernie Sanders has called for canceling all student loan debt, and Sen. Elizabeth Warren has proposed canceling up to $50,000 in debt for anyone earning under $100,000 a year, with lower amounts for those making between $100,000 and $250,000. About 42 million Americans owe $1.5 trillion in student debt, the second-highest form of consumer debt after mortgages. Student debt soared during the recession and in the expansion, driven by escalating tuition costs and a surge in college and graduate-school enrollments. White House and Education Department advisers think a program to cancel a large portion of student debt would be unfair to taxpayers and unpopular among Republican voters, senior administration officials said. Instead, officials are looking at ways to help borrowers lower their debt. The proposals are in flux and would likely require approval by Congress, aides said. One senior official said a plan probably wouldn’t be completed until next year but the administration believes it can gain bipartisan support.
Colleges can be forced to return tuition payments made for students whose parents can’t cover their own debts, according to a federal appeals court ruling that opens up higher education institutions to more litigation in bankruptcy courts, WSJ Pro Bankruptcy reported. An appeals court in Boston said on Tuesday that tuition payments can be recovered when a student’s parents later declare bankruptcy, the first appellate decision to address squarely whether such expenses can be taken back and redistributed. Lawsuits targeting tuition payments have become popular among bankruptcy trustees tasked with digging up funds after parents file for bankruptcy. The results have been mixed in the nation’s bankruptcy courts, with some judges shielding colleges and sometimes the students themselves from having to return tuition money. Many schools have opted to settle with trustees rather than test the controversial lawsuits in the courts. Tuesday’s ruling sided with a bankruptcy trustee who sued Sacred Heart University of Fairfield, Conn., to claw back tuition paid on behalf of a student whose parents were involved in a multimillion-dollar fraud that sent her father to prison. The decision said that because parents don’t benefit economically for sending adult children to college, the tuition they paid can be unwound. The tuition payments “furnished nothing of direct value” to creditors of the parents, said the U.S. Court of Appeals for the First Circuit.
