Biden Education Dept. Reverses on Student Debt Case After Reporting Stirred Outrage

“This is why we have to support journalism,” one reporter said of The Daily Poster’s work exposing the administration’s attempt to “overturn a key legal victory for borrowers.”

By Jessica Corbett.  Published 2-4-2022 by Common Dreams

Screenshot: CNBC

In a boon for both student borrowers and investigative reporting, the U.S. Department of Education on Friday announced a reversal related to student loan court challenge just two days after The Daily Poster revealed the Biden administration was trying to “bolster a legal precedent against millions of debtors being crushed by bankruptcy laws.”

A Department of Education (DOE) spokesperson confirmed in a statement that the administration will now withdraw a notice of appeal filed last month after a federal judge in Delaware ruled in favor of providing 35-year-old Ryan Wolfson, an epileptic man who struggled to find full-time employment, with nearly $100,000 in student loan relief.

“This January 28 notice of appeal will soon be withdrawn,” the DOE said. “The Department of Education has indicated publicly that it is reviewing current bankruptcy policies, a process which remains ongoing. While the student loan payment pause remains in effect, any borrower in an adversary bankruptcy proceeding can request and receive a stay on their proceedings.”

U.S. Under Secretary of Education James Kvaal also tweeted Friday: “We’re working hard to deliver relief to student loan borrowers and have reached 675,000 so far. We will withdraw the appeal in the Wolfson bankruptcy case and review how we handle future claims.”

The administration’s shift comes after two days of outcry following The Daily Poster‘s Wednesday reporting and as President Joe Biden faces mounting pressure from borrowers and congressional Democrats not only to deliver on his campaign promises regarding student loan relief but to go even further for those burdened by debt.

Reporting on the administration’s attempt to “overturn a key legal victory for borrowers,” journalists Julia Rock, Andrew Perez, and Walker Bragman noted that Biden “infamously helped his finance industry donors sculpt” U.S. bankruptcy laws during his decades representing Delaware in the Senate.

The trio of reporters explained that if the Biden administration followed through with an appeal in the case, it “would not only be aiming to keep this man overwhelmed with debt, but also moving to solidify a legal interpretation that could preclude even the most beleaguered student debtors from getting relief through bankruptcy courts.”

The story was quickly picked up by other media outlets including Above the Law and Insider.

Dan Zibel, the vice president and chief counsel at the advocacy group Student Defense, criticized the administration’s initial position, telling Insider that “easing the burden on student loan borrowers in bankruptcy has support across the political spectrum.”

“In this case, the bankruptcy court’s decision is well-reasoned,” Zibel said. “It also joins a growing chorus of decisions noting how the discharge standards for student borrowers have been wrongly applied. The Department of Education should have welcomed this decision.”

After the DOE confirmed that it changed course Friday, readers of The Daily Poster highlighted the importance of such reporting.

“This is why we have to support journalism,” tweeted The New York Times‘ Peter S. Goodman.

“Real reporting matters,” said Krystal Ball, co-host of the podcast and YouTube show Breaking Points. “This is exactly why I subscribe to The Daily Poster.”

In an email to subscribers this week, The Daily Poster‘s founder and editor in chief, David Sirota—an award-winning journalist and former speechwriter for Sen. Bernie Sanders (I-Vt.)—announced the project is expanding and will soon rebrand as The Lever (LeverNews.com).

“When we started out, we really were daily posters, but we now do much more than that,” he wrote. “We have live events, exclusive features, and a Citizens’ Guide, and we are planning to relaunch a regular podcast in the coming weeks. All of this work is designed to hold the powerful accountable—which is why we believe The Lever is a much more accurate moniker for our work.”

“We hold accountable the people moving the levers of power,” Sirota added. “We believe fearless journalism can create leverage that forces politicians to fulfill their promises.”

This work is licensed under Creative Commons (CC BY-NC-ND 3.0).
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