Joe Biden Like Some Sort Of Non-Giving-Up Student Debt-Forgiving, Uh, Guy
He won't stop, until your student debt is dead.
Oh look, here’s Joe Biden with another White House announcement about another pathway to forgive student debt. Even before the Supreme Court last summer shot down his plan to forgive up to $10,000 of federal student debt per borrower (up to $20,000 for folks who had Pell Grants), Biden and Secretary of Education Miguel Cardona were on a mission to reduce student loan debt in every way possible; if anything, the Court’s decision just motivated Biden and Cardona to redouble the effort.
One of the most significant mechanisms for debt forgiveness, which was already in the works before the Court ruled last year, is the administration’s new approach to Income-Driven Repayment (IDR) plans. The new “Saving on a Valuable Education” (SAVE) plan, which rolled out last August, really should revolutionize how people deal with their student loans, and as this terrific article at Washington Monthly points out,
There’s never been a program like it. For millions of Americans, SAVE will be debt cancellation in the form of debt repayment. In other words, the large-scale debt relief activists have spent years fighting for is finally here—it just didn’t arrive in the packaging anyone expected.
Let’s just review what’s awesome about the SAVE program: It’s based on borrowers’ income, but has some huge improvements over previous income-driven repayment (IDR) plans:
SAVE uses a new basis for “discretionary income” that exempts more of a borrower’s income from being considered in calculating their monthly payment.
Also, where prior income based plans set monthly payments at 10 percent of discretionary income, SAVE makes it 5 percent for undergraduate loans, or a weighted average if borrowers have both undergrad and grad school loans. (That provision will kick in in July of this year.) The few borrowers with only grad school debt would still pay 10 percent, but still get a break because of the discretionary income change.
As the article notes,
Take these two new terms together, and nearly all borrowers will have much smaller monthly payments with SAVE compared to REPAYE. For a borrower with only undergraduate loans with, say, a family of four and a household income of $75,000, it’s the difference between paying $250 and $31 every month.
But wait, there’s #III! Used to be that IDR plans required 20 or 25 years of payments before the remaining loan balance was forgiven. SAVE says fuck that:
SAVE offers forgiveness after just 10 years if you borrowed less than $12,000, the position in which many of the most vulnerable borrowers—low-income students who went to community or for-profit colleges and didn’t graduate—are stuck. For each additional $1,000 of debt, one year of repayment is added, capped at 20 years for undergraduate debt holders and 25 years for graduate borrowers. For example, someone with $15,000 in loans would reach forgiveness after 13 years.
And finally (D), there’s interest rates, which are why so many borrowers tear their hair out because it doesn’t take long for interest to dwarf the original amount they borrowed. With SAVE, any interest not covered by your monthly payment is cancelled. Your loan balance will no longer go up while you’re making payments. (And remember, for very low-income borrowers, the monthly payments are zero.)
Oh, OK, one more thing! All the previous IDR plans required borrowers to recertify their income-driven loans, and loan servicers were sometimes not terribly helpful in reminding borrowers, leading to longer repayment periods or just plain never getting to the goal of balance forgiveness. SAVE does away with that: Once you’re on the plan, your income-based payments renew automatically; they also pull data from the IRS so you don’t have to do the annual paperwork.
So, hey, about that new announcement from the White House just before the weekend: The Biden administration is actually rolling out one of the SAVE plan’s provisions early, six months before it was originally going to go into effect, and it’s a big one, regarding the small-balance loan provision mentioned above:
Starting next month, borrowers enrolled in SAVE who took out less than $12,000 in loans and have been in repayment for 10 years will get their remaining student debt cancelled immediately. This action will particularly help community college borrowers, low-income borrowers, and those struggling to repay their loans.
The announcement didn’t offer an estimate of how many people are likely to have their loans forgiven right away, but it’s likely to be “lots and lots.” Also, months during the pandemic student loan pause will count toward the 10-year payment clock, regardless of whether borrowers chose to keep making payments or not.
Look: Joe Biden wants Americans to have less student debt. So far, the administration has wiped out $132 billion in student debt, for some 3.6 million of us (that would include Yr Dok Zoom).
So hey, if you have student loans and you want to get in on the debt forgiveness fun, get your butt to the Federal Student Aid website and see if SAVE is a thing that would be good for you. (It is a thing that would be good for you.) Though really, your butt can stay in your chair and you can simply go there online; it’s a lot easier.
[White House / Washington Monthly / NBC News / Federal Student Aid]
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Whether it’s evangelicals forgiving Trump for sexual assault, fraud, and 91 felony counts or Joe Biden forgiving Student debt, both sides have forgiven inappropriate behavior.
NYT
Finally, some Nice Times news to enjoy reading about!!
I myself may not personally and directly benefit from this, but for sure our society as a whole (not to mention all the millions of individuals and their families) will benefit as so many people now have a way out of that crippling debt, and therefore have more dollars to spend in our ever-hungry economy.
Thanks, Dark Brandon!!