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Ways You Can Still Cancel Your Federal Student Loan Debt

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Ways You Can Still Cancel Your Federal Student Loan Debt

There are still plenty of ways to get your student debt wiped away.

The Supreme Court’s decision on Friday to block President Biden’s loan forgiveness program will be an enormous disappointment for the 43 million people who might have benefited from having up to $20,000 of debt canceled, but millions of borrowers have already gotten relief thanks to a grab bag of methods that are still available.

That’s because the Supreme Court’s disapproval of the plan does not change laws and regulations that already give many federal student loan borrowers an escape hatch.

On Friday afternoon the White House announced a new effort to provide loan cancellation using the so-called “settlement and compromise” authority it has under the Higher Education Act. This effort will take months at a minimum, and its scope and the number of people who could benefit is not yet clear.

What follows is a list of ways to eliminate your federal student loan balance aside from paying in full. (Rules are different for private student loans that do not come from the government, and they’re generally much more strict.) It includes many citations for other articles, F.A.Q.’s and explainers we have published on these topics.

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Too many people do not know they are eligible for one or more of these programs. If you know someone who is struggling with student loan debt, suggest that the borrower review every last option.

This catchall mechanism for repaying debt — or having it canceled if you cannot pay in full after a couple of decades — has the highest potential for the most people. It’s also pretty confusing.

At its most basic, it works the way it sounds: Your monthly payment depends on your income. If you cannot afford to make a standard payment (according to the federal government’s definition of affordability), then you pay less, and a formula determines the exact amount. If you have not repaid your balance after either 20 or 25 years of income-driven payments (depending on the repayment plan — there are several types), then the government cancels the remaining debt.

The U.S. Department of Education explains the different ways this can work on its website.

The Biden administration has proposed a much more generous form of income-driven repayment — separate and apart from the debt-cancellation plan that the court disallowed — that could take effect soon, though legal challenges to this plan are possible as well. My colleague Tara Siegel Bernard wrote a guide to the proposal in January.

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For those in the middle of counting to 20 or 25 years, the Education Department is adjusting the credits that millions of people have earned toward debt cancellation. If you were ever, say, in forbearance or deferment, you could benefit by having additional months or years count toward the total years of qualifying payments. And if you availed yourself of the pandemic payment pause that is supposed to end this year, those months that you did not make payments will still count toward your 20 or 25 years.

Ann Carrns wrote about the Education Department effort in March.

The once-beleaguered loan forgiveness program — where government and nonprofit employees have their balance eliminated after 10 years of payments — has improved in recent years.

During that decade, you have to be working full time in a qualifying job, repaying a so-called direct federal loan, making those payments in an income-driven repayment plan and meeting the payment deadline. Thanks to Biden administration adjustments like the one that Ann wrote about, hundreds of thousands of teachers and social workers have become debt-free recently.

I summarized many changes to the program in a 2021 column. You can read profiles of several people who finally eliminated their balances in a 2022 column. In May, I wrote about a 28 year-old who helped her retired mother cancel her debt.

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For years, the Education Department has maintained a way to cancel student loan debt that allows for “borrower defense.” That allows people to petition the government if they believe their school misled them, engaged in misconduct or broke a state law relating to the loan or the services the school was supposed to provide.

When President Donald J. Trump was in office, the Education Department tried to tighten the rules and slow the process. Under President Biden, the Education Department made the rules more lenient. In 2022, many students who borrowed to attend for-profit schools or those run by chains like Westwood College, Corinthian Colleges, DeVry University and ITT Technical Institute (among others, including schools that shut down altogether) had their debt balances wiped out.

The Education Department has a good explainer on borrower defense on its website.

Yes, you can discharge your student loan debt by filing for personal bankruptcy. No, it is not easy.

To wipe your debt away in court, you need to meet a certain legal standard — proving that repayment will create an “undue hardship.” Often, that can involve arguing that there is a “certainty of hopelessness” that you’ll ever pay down your debt. Much will depend on the judicial circuit you find yourself in and even the judge who hears your case.

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But a total discharge of the debt is not impossible. Last year, the Biden administration made some changes to make the process slightly easier, and Tara wrote about it in November.

In the event that you become disabled in a way that is “total and permanent,” you can discharge your debt.

If the Social Security Administration or the Department of Veterans Affairs classifies you as disabled, this should be sufficient for automatic discharge. Mental illness can be a qualifying condition, and the Social Security Administration explains how on its website.

Otherwise, according to the Education Department, a doctor would need to certify that you were “unable to engage in any substantial gainful activity due to a physical or mental impairment” that could be “expected” to result in death, had been continuous for at least five years or could be expected to last for at least five years.

The Education Department made disability qualification a bit easier last year, and it explained the changes in a new release.

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If you’re a young adult wondering about the federal PLUS loans your relatives took out to pay for your education, you may be wondering whether the debt dies with the person or people who take it on.

It does. The federal government will not make a claim on their estate, and you will not inherit the balance.

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Edison stock turns volatile as growing blame for wildfires lands on the power company

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Edison stock turns volatile as growing blame for wildfires lands on the power company

Southern California’s catastrophic fires have rocked the stock of Edison International, the parent company of Southern California Edison, as accusations and lawsuits about the utility’s potential role in starting the fires mount.

Shares of Edison International closed up 5% at $61.30 on Wednesday after plunging 23% this month, making it one of the worst performers on the Standard & Poor’s 500. The rebound came after Ladenburg Thalmann analysts upgraded their rating of the stock to neutral from sell, saying that their target price of $56.50 a share reflected worst-case outcomes associated with the current wildfires.

“At this time, it is too early to discern what the outcomes will be with respect to the impact of the fires on the California Wildfire Insurance Fund solvency and/or the future earnings of Edison International,” the analysts wrote, according to Barron’s. “An initial assessment of SCE’s role in the start of the fires will likely not occur until the summer of 2025 at the earliest.”

State lawmakers established the wildfire fund in the wake of wildfires several years ago after Wall Street investors lost confidence and ratings agencies threatened to downgrade California’s investor-owned utilities.

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Market analyst Zacks downgraded Edison International stock from outperform to neutral after the fires started last week. Zacks predicted Edison’s operating revenue would increase during 2025 and 2026, while acknowledging that “the company has been incurring significant wildfire-related costs” and that “higher-than-expected decommissioning costs could materially impact the company’s operating results.”

RBC Capital Markets, another analyst, had a loftier view of Edison as recently as October when it called the utility “a high quality operator, with investor confidence around wildfire risk improving from best in class mitigation efforts.”

The fallout from the fires is an abrupt disruption for a company that had been surging in recent months. In its most recent quarterly report, the company posted a profit of $516 million, or $1.33 per share, compared with $155 million, or 40 cent per share, in the third quarter of last year.

“Our team has achieved remarkable success over the last several years managing unprecedented climate challenges, making our operations more resilient and positioning us strongly for the growth ahead,” President Pedro J. Pizarro said in the report.

Fire agencies are investigating whether downed Southern California Edison utility equipment played a role in igniting the 800-acre Hurst fire near Sylmar, company officials have acknowledged.

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The company issued a report Friday saying that a downed conductor was discovered at a tower in the vicinity of the Hurst fire, but that it “does not know whether the damage observed occurred before or after the start of the fire.” The fire is nearly fully contained, according to the California Department of Forestry and Fire Protection.

SCE is also under scrutiny for possibly being involved in sparking the Eaton fire that has burned 14,000 acres and destroyed thousands of structures, wiping out whole swaths of Altadena, where at least 16 people died in the blaze.

On Tuesday the Newport Beach law firm of Bridgford, Gleason & Artinian filed a mass action complaint in Los Angeles Superior Court against SCE regarding the Eaton fire on behalf of victims including Jeremy Gursey, whose Altadena property was destroyed in the fire.

“Based upon our investigation, our discussions with various consultants, the public statements of SCE, and the video evidence of the fire’s origin, we believe that the Eaton Fire was ignited because of SCE’s failure to de-energize its overhead wires which traverse Eaton Canyon—despite a red flag PDS wind warning issued by the national weather service the day before the ignition of the fire,” lawyer Richard Bridgford said in a statement.

The firm said it has represented more than 10,000 California fire victims in past suits against Pacific Gas & Electric Co. and SCE. Bridgford told Yahoo Finance that his inbox is full of Southern California residents seeking to participate in the Eaton fire lawsuit and that he anticipates “there’ll be hundreds joining.”

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The most extreme level of a red flag fire warning, a “particularly dangerous situation,” returned to parts of Los Angeles and Ventura counties Wednesday morning, heightening concerns about the potential for new fires.

“The danger has not yet passed,” Los Angeles Fire Department Chief Kristin Crowley said during a news conference Wednesday. “So please prioritize your safety.”

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Albania Gives Jared Kushner Hotel Project a Nod as Trump Returns

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Albania Gives Jared Kushner Hotel Project a Nod as Trump Returns

The government of Albania has given preliminary approval to a plan proposed by Jared Kushner, Donald J. Trump’s son-in-law, to build a $1.4 billion luxury hotel complex on a small abandoned military base off the coast of Albania.

The project is one of several involving Mr. Trump and his extended family that directly involve foreign government entities that will be moving ahead even while Mr. Trump will be in charge of foreign policy related to these same nations.

The approval by Albania’s Strategic Investment Committee — which is led by Prime Minister Edi Rama — gives Mr. Kushner and his business partners the right to move ahead with accelerated negotiations to build the luxury resort on a 111-acre section of the 2.2-square-mile island of Sazan that will be connected by ferry to the mainland.

Mr. Kushner and the Albanian government did not respond Wednesday to requests for comment. But when previously asked about this project, both have said that the evaluation is not being influenced by Mr. Kushner’s ties to Mr. Trump or any effort to try to seek favors from the U.S. government.

“The fact that such a renowned American entrepreneur shows his interest on investing in Albania makes us very proud and happy,” a spokesman for Mr. Rama said last year in a statement to The New York Times when asked about the projects.

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Mr. Kushner’s Affinity Partners, a private equity company backed with about $4.6 billion in money mostly from Saudi Arabia and other Middle East sovereign wealth funds, is pursuing the Albania project along with Asher Abehsera, a real-estate executive that Mr. Kushner has previously teamed up with to build projects in Brooklyn, N.Y.

The Albanian government, according to an official document recently posted online, will now work with their American partners to clear the proposed hotel site of any potential buried munitions and to examine any other environmental or legal concerns that need to be resolved before the project can move ahead.

The document, dated Dec. 30, notes that the government “has the right to revoke the decision,” depending on the final project negotiations.

Mr. Kushner’s firm has said the plan is to build a five-star “eco-resort community” on the island by turning a “former military base into a vibrant international destination for hospitality and wellness.”

Ivanka Trump, Mr. Trump’s daughter, has said she is helping with the project as well. “We will execute on it,” she said about the project, during a podcast last year.

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This project is just one of two major real-estate deals that Mr. Kushner is pursuing along with Mr. Abehsera that involve foreign governments.

Separately, the partnership received preliminary approval last year to build a luxury hotel complex in Belgrade, Serbia, in the former ministry of defense building, which has sat empty for decades after it was bombed by NATO in 1999 during a war there.

Serbia and Albania have foreign policy matters pending with the United States, as both countries seek continued U.S. support for their long-stalled efforts to join the European Union, and officials in Washington are trying to convince Serbia to tighten ties with the United States, instead of Russia.

Virginia Canter, who served as White House ethics lawyer during the Obama and Clinton administrations and also an ethics adviser to the International Monetary Fund, said even if there was no attempt to gain influence with Mr. Trump, any government deal involving his family creates that impression.

“It all looks like favoritism, like they are providing access to Kushner because they want to be on the good side of Trump,” Ms. Canter said, now with State Democracy Defenders Fund, a group that tracks federal government corruption and ethics issues.

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Craft supplies retailer Joann declares bankruptcy for the second time in a year

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Craft supplies retailer Joann declares bankruptcy for the second time in a year

The craft supplies and fabric retailer Joann filed for bankruptcy for the second time in less than a year, as the chain wrestles with declining sales and inventory shortages, the company said Wednesday.

The retailer emerged from a previous Chapter 11 bankruptcy process last April after eliminating $505 million in debt. Now, with $615 million in liabilities, the company will begin a court-supervised sale of its assets to repay creditors. The company owes an additional $133 million to its suppliers.

“We hope that this process enables us to find a path that would allow Joann to continue operating,” said interim Chief Executive Michael Prendergast in a statement. “The last several years have presented significant and lasting challenges in the retail environment, which, coupled with our current financial position and constrained inventory levels, forced us to take this step.”

Joann’s more than 800 stores and websites will remain open throughout the bankruptcy process, the company said, and employees will continue to receive pay and benefits. The Hudson, Ohio-based company was founded in 1943 and has stores in 49 states, including several in Southern California.

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According to court documents, Joann began receiving unpredictable and inconsistent deliveries of yarn and sewing items from its suppliers, making it difficult to keep its shelves stocked. Joann’s suppliers also discontinued certain items the retailer relied on.

Along with the “unanticipated inventory challenges,” Joann and other retailers face pressure from inflation-wary consumers and interest rates that were for a time the highest in decades. The crafts supplier has also been hindered by competition from others in the space, including Michael’s, Etsy and Hobby Lobby, said Retail Wire Chief Executive Dominick Miserandino.

“It did not necessarily learn to evolve like its nearby competitors,” Miserandino said of Joann. “Not many people have heard of Joann in the way they’ve heard of Michael’s.”

Joann is not the first retailer to continue to struggle after going through bankruptcy. The party supply chain Party City announced last month it would be shutting down operations, after filing for and emerging from Chapter 11 bankruptcy in 2023.

Over the last two years, more than 60 companies have filed for bankruptcy for a second or third time, Bloomberg reported, based on information from BankruptcyData. That’s the most over a comparable period since 2020, when the COVID-19 pandemic kept shoppers home.

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Discount chain Big Lots filed for bankruptcy last September, and the Container Store, a retailer offering storage and organization products, declared bankruptcy last month. Companies that rely heavily on brick-and-mortar locations are scrambling to keep up with online retailers and big-box chains. Fast-casual restaurants such as Red Lobster and Rubio’s Coastal Grill have also struggled.

High prices have prompted consumers to pull back on discretionary spending, while rising operating and labor costs put additional pressure on businesses, experts said. The U.S. annual inflation rate for 2024 was 2.9%, down from 3.4% in 2023. But inflation has been on the rise since September and remains above the Federal Reserve’s goal of 2%.

If a sale process for Joann is approved, Gordon Brothers Retail Partners would serve as the stalking-horse bidder and set the floor for the auction.

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