Causes.com
| 4.8.24
Biden Admin Unveils New Student Debt Forgiveness Plan
How do you feel about Biden's new plan?
Updated April 8, 2024, 4:30 p.m. EST
- The Biden administration revealed a new plan to erase student debt for millions of Americans. If the new plan is passed, over 30 million borrowers could have all or some of their debt forgiven.
- Biden's plan amends an earlier version that the Supreme Court rejected in June of last year. It offers relief to specific groups of borrowers, including those who have carried debt for over 20 years, those facing economic hardship, those already eligible for loan forgiveness or discharge programs but haven't applied, and those who owe more money than they did at the start of their repayment. Many borrowers could be relieved of high interest balances, regardless of income.
- This new plan could fulfill promises the president made to voters during his campaign in 2020. U.S. Education Secretary Miguel Cardona said the new proposal would mean "freedom from feeling like your student loan bills compete with basic needs like grocery or health care."
Updated July 17, 2023
- Just over two weeks after the Supreme Court struck down Biden's plan to cancel over $400 billion in student loan debt, his administration wiped out nearly $40 billion for over 800,000 borrowers.
- The debt was canceled for borrowers with more than 20 years worth of outstanding payments. The Department of Education said students will be notified if their loans were discharged in the coming weeks.
- The move technically fixed administrative errors, as some payments did not count toward the total student loan. Secretary of Education Miguel Cardona said in a statement:
"For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness."
Updated June 30, 2023
- In a 6-3 decision, the Supreme Court rejected President Biden's plan to cancel over $400 billion in student loan debt. The conservative supermajority claimed Biden's plan overstepped the powers of the Education Department.
- Nearly 26 million borrowers applied to have a part of their student loan debt erased. Sixteen million applications had been approved already.
- White House officials said Biden would denounce the court's ruling in remarks later on Friday. He is expected to "announce new actions to protect student loan borrowers."
- Student loan payments will resume in the fall for millions of borrowers.
Updated May 30, 2023
- President Joe Biden and Speaker of the House Kevin McCarthy came to a deal to avoid a debt default, which would impact millions of Americans with student debt.
- After the yearslong pause, the agreed-upon legislation to raise the debt ceiling includes a provision requiring borrowers to repay their loans again by the end of the summer. If the bill passes, which it is expected to, Biden will be unable to issue any more last-minute extensions to the student debt payment pause.
- The legislation does not impact Biden's plan to forgive up to $20,000 in debt, which the Supreme Court is reviewing. A ruling from the court is expected in June.
Updated December 2, 2022
- The U.S. Supreme Court will review the legality of President Biden's student debt relief plan.
- Oral arguments will begin in February, with a decision expected in June.
- The program will remain frozen until the case is heard. White House Press Secretary Karine Jean-Pierre said that the U.S. Department of Justice will keep applicants' information on file so the program can continue "once we prevail in court."
Updated November 15, 2022
- On Monday, Nov. 14, the 8th Circuit Court of Appeals in St. Louis issued a nationwide order temporarily barring Biden's student loan relief plans, putting the program in legal limbo.
- The federal appeals court's ruling came after six states — Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina — claimed that the debt relief plan threatens their future tax revenues and circumvents congressional authority.
- The Biden administration could ask the Supreme Court to lift the order. White House Press Secretary Karine Jean-Pierre said:
"We are confident in our legal authority for the student debt relief program and believe it is necessary to help borrowers most in need as they recover from the pandemic. The Administration will continue to fight these baseless lawsuits by Republican officials and special interests and will never stop fighting to support working and middle-class Americans."
Updated November 11, 2022
- On Nov. 10, a federal judge in Texas declared President Joe Biden's student loan forgiveness program to be illegal. This ruling has prompted the Department of Education (DOE) to stop accepting applications for debt relief. 26 million borrowers have already applied to the program.
- The Department of Justice (DOJ) immediately appealed to the 5th U.S. Circuit Court of Appeals, but the case will have to play out in full before the administration can offer any debt relief.
- Borrowers will now have to wait for the government's appeal to the 5th Circut Court, which could take months for a final ruling. If the court overturns the Texas court's decision, the administration can begin canceling the debt.
- Initially, the Biden administration said it would start canceling student debt in January. After this week's ruling, that timeline is now in jeopardy.
Updated October 17, 2022
- On Oct. 14, the U.S. Education Department released a beta form of the application for Biden’s student loan debt cancellation. Borrowers can apply during this testing period to allow the department to determine if the application needs any fixing before the official launch.
- You can apply here, and your application will be processed when the official site launches. Resubmission will not be necessary.
- The official application will be released later this month.
Updated October 13, 2022
- On Tuesday, Biden's senior administration officials announced that the debt relief application will be available sometime this October through Dec. 31, 2023.
- The application will be live on a Government website in English and Spanish.
- To fill out the application, you will need only basic information, including name, birth date, Social Security number, phone number, and e-mail address. Applicants will not need to upload any documents, their tax records, or their Federal Student Aid ID login.
- Rather than providing documentation that a borrower earned less than $125,000, they will check a box to certify under penalty of perjury that all application information is valid.
- A senior administration official said borrowers would see their debts canceled weeks after filling out the application.
- The White House released a preview of the student-loan forgiveness application:
Student Debt Relief Update:
— The White House (@WhiteHouse) October 11, 2022
Today, the U.S. Department of Education is previewing the student debt relief application form. Here’s the latest: pic.twitter.com/efSzRbions
Updated September 14, 2022
- A letter signed by 22 Republican governors is calling for President Joe Biden to withdraw his student loan forgiveness plan, claiming it would harm low-income families, encourage more student borrowing, incentivize higher tuition rates, and drive up inflation.
- The group includes Texas Gov. Greg Abbott, Florida Gov. Ron DeSantis, and Iowa Gov. Kim Reynolds, who wrote:
“Only 16-17 percent of Americans have federal student loan debt, and yet, your plan will require their debts be redistributed and paid by the vast majority of taxpayers. Shifting the burden of debt from the wealthy to working Americans has a regressive impact that harms lower income families…hourly workers will pay off the master’s and doctorate degrees of high salaried lawyers, doctors, and professors...Simply put, your plan rewards the rich and punishes the poor.”
- The White House has said that 90% of those who will benefit from the program earn less than $75,000 a year, with spokesperson Abdullah Hasan writing in response to the letter:
“These same Republican governors didn’t seem to object when their Republican colleagues in Congress passed a $2 trillion tax giveaway for the rich or had hundreds of thousands of dollars of their own small business loans forgiven…While Republican elected officials try to keep working middle-class Americans in mountains of debt, President Biden is committed to delivering relief to the borrowers who need it most.”
Updated September 2, 2022
- North Carolina will consider Biden's student loan forgiveness taxable income, according to the state's Department of Revenue. While the administration's plan is exempt from federal tax, individual state taxes are still at play.
- The state can tax this relief because it did not fully adopt a specific Section of the Internal Revenue Code, which exempts student loan forgiveness from tax as part of the American Rescue Plan Act.
- Mississippi has confirmed it will also tax residents' forgiven student loan debt. 13 states are able to follow suit, and the Tax Foundation projects that Arkansas, Minnesota, and Wisconsin may do the same.
What’s the story?
- President Biden announced that he is canceling $10,000 in student loan debt for borrowers that earn less than $125,000 per year. Millions of Americans anticipated the announcement as Biden’s campaign promised this economic relief for months.
- Students who received the low-income loans known as Pell grants throughout their education will be eligible for $20,000 in debt forgiveness. Biden also extended the pandemic pause on loan payments until the end of the year.
- Many were unsure of the potential for debt forgiveness from the Biden administration because of the fears that it would exacerbate inflation before the midterm elections. The White House addressed those concerns by limiting loan relief to only individual borrowers who earn less than $125,000 or households earning less than $250,000 a year. The Biden administration declared that 90% of relief will go to households that make $75,000 or less a year.
- Biden also proposed changes to the repayment systems, which would cut many borrowers’ bills monthly. Through the Education Department, Biden hopes to cap undergraduates’ loans at 5% of their discretionary monthly income. The current plans cap payments at 10% of a borrower’s income. Biden also seeks to have the government cover the monthly interest payments.
- The timing of the relief is still uncertain. Many expect the plan to face legal challenges, mainly because Biden used executive action rather than legislation to forgive the loans.
What they’re saying
- Jason Furman, Harvard economist and economist for former President Obama, said:
“[The plan] would unnecessarily provide tens of thousands of dollars to many high-income households in a way that goes well beyond even what he promised in the heat of a Democratic primary when the problem facing the country was low inflation — not high inflation.”
- Sen. Elizabeth Warren (D-MA) praised Biden’s plan but will push for more debt forgiveness. She said:
“No president in history has reached so directly into the lives of so many millions of working people and said, ‘You invested in yourself to get an education, and the rest of the country wants to help you with that.’”
- Sen. Ben Sasse (R-NE) said:
“[The plan] forces blue-collar workers to subsidize white-collar graduate students. Instead of demanding accountability from an underperforming higher-education sector that pushes so many young Americans into massive debt, the administration’s unilateral plan baptizes a broken system.”
- While announcing the plan at the White House, Biden said:
"It's about opportunity, it's about giving people a fair shot, and it's about the one word America can be defied by -- possibilities."
Political response
- Many are waiting to see how Biden’s plan will impact the midterm elections. Republicans are hoping to flip the House and the Senate this fall, and using the student debt controversy to their advantage. Some argue that low-income taxpayers who did not go to college — and have no student debt — will end up subsidizing those who have a degree and stand to earn more over their lifetime.
- Furman covered the potential impact the plan may have on inflation in a Twitter thread, saying that debt forgiveness is like dumping gasoline on a burning fire. Biden rejected claims that the plan could hike inflation.
- Some say the plan could increase turnout among young voters who are facing the burden of student debt this fall.
The big picture: Debt in the U.S.
- 48 million people owe a total of $1.75 trillion in student loan debt — the second highest consumer debt after mortgages.
- Many Democrats argue that debt forgiveness is necessary to address the wealth gap in the nation. Progressive groups believe that addressing economic racial inequality would require forgiving $50,000 in debt since many reports show that nonwhite borrowers have a higher average loan balance than their white counterparts.
- Education experts point out that while Biden’s efforts will ease the lives and financial strain of many borrowers, it does not address the fundamental problem of the high cost of education in America.
How do you feel about Biden's new plan?
-Jamie Epstein, Casey Dawson
(Photo credit: iStock/Kameleon007)
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The student loan program is a great example of how a good program can have grossly unintended consequences when the greedy find ways to exploit it.
I fault congress for not following this program as it evolved and not taking any corrective actions along the way. They were all probably too busy pandering for campaign donations and their assigned fund raising duties for their party’s.
My first inclination is to say that I worked my way through College and paid for most of it myself (one quarter was funded by wedding present gifts). I married over the summer after my second year and our first child was born a year later. In order to complete a five year program in four years, there was the quarter from hell, where I took seven 3 quarter hour credit classes in my major, worked three part time jobs and had a newborn and wife to attend to all at the same time. I learned how to go without sleep that quarter. Looking at today’s tuitions, I realize that even with that sustained level of effort, I would not have been able to pay today’s tuitions nor living expenses.
So what went wrong?
The first thing that went wrong, was that many of the loans had a guaranteed principal that was shielded from bankruptcy protection, and that gave lenders little to no incentive to counsel borrowers about whether or not their course of study would allow them to find employment able to repay these loans. There was no counseling regarding the interest burden which would accrue, particularly with variable interest rates and late payment penalties.
Secondly, these loans were offered directly to high school students heading off to college with no required parental involvement. Most had little understanding of what impact taking on large debts would have on their lives, because of the false promise that any college degree would automatically ensure financial success.
Finally, the Universities saw then influx of money from these loans as an opportunity to raise tuitions and to raise them dramatically year by year. In order to complete multi-year programs, the students had to borrow much more than expected annually in order to complete their degree programs. To bail out the program would be to lose the ‘investments’ that they had already made, with a lingering debt that still had to be repaid. Some private organizations were outright profiteering be these means.
The student loan program gave the opportunity for banks to lend lots of guaranteed principal loans to naive students. The Universities found a source of funds to upgrade their facilities and incentivize their staff. The students paid for all of this by taking on huge debts, because once the cycle started they were entrapped to continue or lose all that they had already committed to.
The Congress failed these borrowers because, if they had monitored this program, corrective actions could have been taken such as mandatory debt counseling before giving loans and limiting the ability of Universities to raise tuition more than COLA rate for student committed to two or four year degree program.
The failure of our government to monitor this program and take corrective action for the student borrowers abuse by lenders and providers,mandates corrective actions. I think that the Biden plan is thoughtful, far reaching and strikes a realistic balance between those that say ‘hell, no’ and those that say ‘not enough’.
The other corrective actions in this legislation will do a lot to prevent much of the financial abuse fostered on naive student borrowers in the future.
I do think that more relief will be required for those of limited income and that this and future reliefs will be a sound economic investment in economic future of this country - just as the part of the PPP funding that was not directed to Congresspeople’s benefactors, was a solid economic investment in our country’s future.
Step in the right direction but the whole student loans program needs to be reformed as it is:
1) no longer a fair lending program like it was initially
2) college and university education costs need to be affordable especially in institutions receiving tax dollars.
My 1st student loan in the 1970s came with a coupon book which each payment was for a fixed amount with fixed interest at the prime rate. It took 10 years to pay it off but there was a clear end to the loan. College tuition went from $300/credit hour to $700/credit hour during a 3 year program and there is no choice but to pay the increases to receive the degree.
My 2nd loan for a smaller amount accrues interest that gets added into the balance so interest is being calculated on interest like a creditcard. Luckily I've used corporate tuition reimbursement to finance most if it but I can see how someone who doesn't have access to tuition reimbursement programs could run up some large balances because:
1) the total amount of the loan is an unknown
2) total amount of interest is unkniwn
3) there is no credit check to see if people will be able to pay it back
4) colleges & universities are increasing their tuition rates while the student is locked into the program. My 2nd loan the cost per credit hour changed, as well as how many credit hours each semester is. Plus a year is now 4 semesters and no longer 2.
The way student loan programs are now they are a moving target that enables educational institution to increase cost/credit hour, credit hours/class, and credit hours to graduate.
We're not going to listen to the people complain about how this increases the national debt or falls on the taxpayers.
If you don't support raising taxes on the wealthy and corporations and fully staffing the IRS to collect those taxes, then you're the reason we have such a high national debt. We can afford this if we collect what we are owed.
When you put aside all the bullshit, look at actual facts, follow the money and who profits from the current structure of the student loan program, a fundamental issue is being ignored by both sides. The majority of the current problems with the student loan programs can be traced back to changes made under Ronald Reagan and Newt Gingrich.
Yes, the government does have the authority to forgive debts owed to it, just like it forgave $700 billion in PPP loans from US businesses during the pandemic. At least 20 million Americans are going to directly benefit from this single action, and all are lower-class and middle-class Americans! We should all be celebrating for our fellow Americans, y'all! It is unfortunate that a "Me Not We" culture is still so pervasive across Americans' mindsets. Please understand this fact: 20 million Americans now have an extra $10k-20k in each of their pockets to spend on food and bills, which puts more money into our country's economy, boosting GDP! This benefits all of us in the long-run when so many of our fellow Americans can start their own lives and families with a smaller burden of debt. And to everyone still screaming bloody outrage over student loan forgiveness: Where was all this outrage when the government canceled over $700 billion in PPP loans to businesses across America that benefitted even the rich? Would you also say it was that people should not get the COVID vaccine because it be unfair to the people who died before it was released? Whataboutism will kill us all in the end if we continue to use it!
Student loan program changes under the Reagan Administration (1984)
"During Reagan’s two terms as president, dedicated funding for outright grants-in-aid decreased, federal guidelines pushed individual loans, and private bill collectors were brought in to ensure that the hardest kind of debt to escape was whatever you took on for your education. Even more important was the shift in tone and expectation. Public goods became private services, and by the end of the 1980s, the anti-tax, infra-structure-starving, neoliberal Weltanschauung meant that as states cut their budgets, support for higher education was thrown into a cage match with every other necessary public good."
https://www.salon.com/2014/07/05/ronald_reagan_stuck_it_to_millennials_a_college_debt_history_lesson_no_one_tells/
I feel education is way too expensive in America! That is what we need to fix. This is a band aid on a gaping wound. However, it is nice to see the poor get a break for a change instead of the gazillionaires.
Most naysayers here got pandemic assistance checks & substantial ppp loans forgiven
You have no right to opine in the negative And if you insist then first return all those funds!
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The rich and wealthy want to dump down America and corporations want and need educated people, the problem is educated people question everything and are willing to find out the truth with multiple sources and not the echo chamber, but in saying this not all will take the time to find out!
God made Trump and the Republican Party, Really bad to test the Christian, Muslim, Jews and all religion and their beliefs right or wrong!
If these loans are being paid because of the Racket the student loan industry has over these young people who are struggling to start out in life, and owe more then when the started paying the loans back . Yes they need some type of help from this debt. Many have paid for decade-s and still owe more then the original amount they borrowed, from what I understand. This is not how you should state out your career after finishing college with your first job. You should be saving money too purchase a home, and all of the items the go into that first home, including a start to a Family.
Yes. This helps si many of us who have paid for years in end on time.
Forgive some portion but not all, and cap the salary amount for those who will be elegible to receive the funds.
Help the students and help the country! The way they have been taken advantage of by predatory loan companies is unconscionable. We need a young and vital work force that is not so encumbered that they cannot be viable contributors to our economy.
I have low income, but I still saved money to pay for my son's college (State University). How is it fair to me that some people get a free ride?????
The government should get out of the education business. It seems forgiving school loans is just a bigger tax burden on the middle class.
The government can't continually print money they don't have and borrow what they can't pay back. It will all come to a head and burst.
It is the government's fault for guaranteeing student loans, causing the tuition to go up instead of allowing the market to dictate what tuition should be.
There isn't a single thing the government doesn't subsidize driving up the price of that commodity.
What will happen will be the Venezuela effect, wheelbarrow full of cash to buy a loaf of bread.
It is unastainable and we have our politicians to blame. The politicians salary should be linked to the national debt. If it's in the red the politicians won't get paid until the deficit is balanced is greatly reduced or balanced.
How do you feel about Biden's new buy back student loan plan? Sad. Why so?
1. It is most surely a continued attempt at gaining and regaining past voters to the Democratic fold.
2. It's not fair to those who took the time to pay off their students education loans.
3. The Biden. student loan buyback joins the open border failure seen during Bidens failure approval record we seen.
4. Of course those on the Democratwill deny the facts as stated.
SP
Socialism at its finest, Next Democrats will be offering free Heroin for the junkie votes.
At this point I am for anything that the GOP hates. They are a perfect barometer of evil. I am also very concerned that hard working Americans on Social Security cannot make ends meet in this economy. I hope Biden throws some funds into that program too, and soon.
This looks great!
BUT it won't take very long for the Forces of Republican Evil to get this before the Supreme Court.
Do you think the Supremely Republican Court will allow this to actual go forward?
They took on the debt and need to repay it. I am generally right in the middle politically, so agree with some social programs where people are in need through no fault of their own, but taking a loan and not repaying is different.
Those debts are cruel! The loan sharks and the people who decided the conditions of those cruel loans were fair need to be severely punished.
Here we are again. Biden trying to buy votes. This is Unconstitutional. The absurdity is that our nation is so far in debt,we don't need to be paying for other people to get out of paying their debts. I payed for my education, these people should take responsibility for their own finances. It doesn't go away, taxpayers pay for it.
Many US citizen taxpayers have worked hard to attend college and work a job to pay for our college educations. Many have had our children earn scholarships and work their way through college. My husband and I both worked extra jobs to pay my husband's way through college. Now Mr. Biden wants me to pay off college loans for particular students of his choosing. When these students took out college loans, they were made aware that loans we're to be paid back. They need to be held accountable. Also, Mr. Biden needs to obey the law of the land, rather than working so hard to overthrow our Constitution, Bill of Rights, and established law within our nation and states.
The government has made money off the student loan program sharing in profits with lenders charging usury rates. Time to use this profit to pay off interest on student loans that should have never been charged at such high rates in the 1st place as a government guaranteed loan had no risk unlike car loans, consumer loans, credit cards, mortgages, etc.
Consider it a rebate on high interest rates.
"From 1997 to 2021, the Education Department estimated that payments from federal direct student loans would generate $114 billion for the government. But the GAO found that, as of 2021, the program has actually cost the government an estimated $197 billion"
https://www.gao.gov/products/gao-22-105365
https://www.npr.org/2022/07/29/1114560119/student-loan-program-cost
So, I'm a uneducated person but, this is a ginny pig to see if we can expand this idea beyond college debt?
wipe out all student debt both public and private
like every thing in this country when there are no checks and balances.
Banks have been robbing these students blind for decades and have gone unscathed!! it's about time they are some what punished for their thievery!!