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    Joe Biden will cancel $7.4bn in student debt for 277,000 borrowers

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    The Biden administration will cancel $7.4bn in student debt for 277,000 borrowers, the White House said on Friday, the latest in a series of debt cancellations.Joe Biden announced plans on Monday to ease student debt that would benefit at least 23 million Americans, addressing a key issue for young voters whose support he needs as he seeks re-election in November.Those plans include canceling up to $20,000 of accrued and capitalized interest for borrowers, regardless of income, which Biden’s administration estimates would eliminate the entirety of that interest for 23 million borrowers.The latest round of debt relief affects 277,000 Americans enrolled in the Save Plan, other borrowers enrolled in Income-Driven Repayment plans, and borrowers receiving Public Service Loan Forgiveness, the White House said in a statement.It follows an announcement in March that $6bn in student loans would be canceled for 78,000 borrowers.The administration said on Friday it had approved $153bn in student debt relief for 4.3 million Americans.Biden, a Democrat, last year pledged to find other avenues for tackling debt relief after the US supreme court in June blocked his broader plan to cancel $430bn in student loan debt.The campaign of the former president Donald Trump, Biden’s Republican challenger in the White House race, in March criticized the student loan cancellation as a bailout that was done “without a single act of Congress”.The issue remains high on the agenda of younger voters, many of whom have concerns about Biden’s foreign policy on the war in Gaza and fault him for not achieving greater debt forgiveness.Republicans have called Biden’s student loan forgiveness approach an overreach of his authority and an unfair benefit to college-educated borrowers while other borrowers received no such relief.Roughly half of federal student loan debt is held by people with a graduate degree, according to the Brookings Institution thinktank. An August 2023 report by the Department of Education said graduate students received the highest share – 47% – of federal student loan disbursements from 2021-22, even though they accounted for only 21% of all borrowers. More

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      Biden announces new plan to cancel student loans for 30m borrowers

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      Joe Biden announced plans to cancel student loans for 30 million borrowers on Monday, the administration’s latest push on addressing student debt before the presidential election.The plan primarily targets borrowers who have accrued a high level of interest on their debt and those who have been in repayment for at least 20 years. Borrowers who face extreme economic hardship could also see some relief.The White House said that parts of the plan could begin to take effect in the early fall, at the earliest. In addition to a waiting period to receive public comment, the administration is expecting legal challenges from Republicans that could stall the plan from going into effect.Biden touted the new plan in a speech Monday afternoon in Madison, Wisconsin, where he said “too many people feel the strain and stress” of student loans.“Today, too many Americans, especially young people, are saddled with unsustainable debts in exchange for a college degree,” Biden said. “It’s a drag on our local economy.“Now, thanks to what we’re doing, that debt is no longer holding you back.The bulk of borrowers impacted by the plan will be those who owe more than their original balance because of accumulated interest. Borrowers who make under $120,000 a year, or married borrowers who make under $240,000, will automatically receive cancellation for the amount their balance has grown because of interest, up to $20,000. This cancellation will be automatic, and the administration estimates it will impact more than 25 million borrowers.The plan also targets borrowers who have held their debt for nearly 20 years. Borrowers who started repayment on their undergraduate debt on or before 1 July 2005 or their graduate school debt on or before 1 July 2000 will see the rest of their loans forgiven. The White House estimates about 2.5 million borrowers would be affected by this.Borrowers who are facing economic hardship and are at high risk of defaulting on their loans because of economic hardship in their daily lives, for example having medical debt or child care costs, may see their debt automatically cancelled under the plan.The administration is also trying to automatically enroll borrowers who are qualified for various forgiveness programs, including the Save plan and the Public Service Loan Forgiveness plan, but have not signed up for them. The White House estimates 2 million borrowers who could see their loans forgiven have not signed up for the programs.If the plan is executed, it would bring the total number of borrowers who have seen debt relief under Biden to 30 million.Though he had promised to cancel student debt during his 2020 presidential campaign, Biden has been fighting an uphill battle to try to address student debt after the supreme court last year blocked his big plan to cancel some debt for at least 43 million borrowers, including $20,000 in cancellation for some borrowers.After the supreme court’s decision, the White House’s student debt strategy has been to specifically target groups of borrowers for relief, especially those who have held debt for multiple decades and students who attended predatory for-profit schools.The White House also launched the Save (Saving on A Valuable Education) plan, a revamped income-driven repayment plan that allows borrowers to be on track for forgiveness if they pay a set portion of their income every month.Biden on Wednesday noted that “tens of millions of people’s debt was literally about to get cancelled”.“Then some of my Republican friends, elected officials and special interests sued us, and the supreme court blocked us. But that didn’t stop us,” he said. “I mean it sincerely, we continue to find alternatives past student debt repayments that are not challengeable.” More

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      Is Biden’s student debt action enough to win back young voters angry over Gaza?

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      Maxwell Frost, the only gen Z member of Congress, was front and center when Joe Biden announced last week that he was canceling $1.2bn of student loan debt for more than 150,000 Americans.“President Biden knows that canceling student debt is an important issue for young people across our country,” said Frost, who has been a surrogate for Biden’s campaign. “The president’s actions on student debt are in stark contrast with Donald Trump, who spent his entire time in office sabotaging efforts to aid borrowers who are just trying to make ends meet.”Frost’s comments underline how much Biden wants young voters to know that he hasn’t given up on fixing student debt, even after the supreme court struck down his cancellation plan last summer.But like some of Biden’s other most progressive policies convincing young voters that he has a decent track record on the issues – not least the war in Gaza – that will drive them to the ballot box is proving challenging.“[Biden] coming to the table to talk about student debt forgiveness is a huge win ,” said Antonio Arellano, NextGen’s vice-president of communications.“In America, young voters right now are the largest eligible voting bloc in modern American history, surpassing baby boomers. And they’re being very clear about where they stand,” Arellano said. “So it would be in the best interest of the administration to listen to the young people that are simply demanding humanitarian priorities and protections for folks that are just in the crosshairs of this greater war.”When contrasted against Trump, Biden’s student loan policies appear decidedly progressive. Biden’s federal student loan program would have seen 43 million borrowers receive some relief, including up to $20,000 off loans for some borrowers. But the supreme court’s conservative majority, including the three justices appointed by Trump, struck down the plan last June.The ruling was a blow to millions of borrowers across the country. An estimated 45 million Americans hold a total of $1.6tn in student loan debt.“The fight is not over,” Biden vowed after the decision, noting that the “hypocrisy of Republican elected officials is stunning”.Since then, Biden has kicked off several loan forgiveness measures along with piecemeal cancellations worth up to $138bn for 3.9 million borrowers. The most recent cancellation was targeted toward those who had borrowed $12,000 or less and have had their debt for at least 10 years. Many of these borrowers probably have much higher debts because of accumulated interest over the years.The White House has been instituting “huge fixes to the broken student debt system. It’s not debt cancellation … but these are drastic changes”, said Natalia Abrams, president and founder of the Student Debt Crisis Center, a student borrower advocacy group.Biden’s continued poor polling on student debt may be in part down to timing. Young voters may not be seeing the immediate relief themselves. Even if young low- and middle-income are on Biden’s new Save plan, which adjusts monthly payments based on a borrowers monthly income, those on the plan won’t see forgiveness after at least 20 years.“They haven’t been borrowing for 10 years,” Abrams said. “I can see how young people, because they’re new to the lending system, feel left out … but [student debt] is impacting people of all ages.”Student debt remains one of the biggest issues motivating young voters. The national youth-focused nonpartisan voter registration and education program NextGen says emails and call-outs about student debt get the most engagement on their site. But young voters see Biden’s policies on the issue in a wider context of other issues, particularly the Israel-Gaza war.When the White House announced where Biden would be delivering a speech on his most recent student debt cancellation, it waited a day before to disclose the location, likely to avoid another one of the many pro-Palestinian protests that have interrupted his events for months.“Doing a few good things here like canceling student debt and continuing on those promises [Biden] made won’t take away from a lot of bad things we’re doing elsewhere,” said Usamah Andrabi, communications director for the progressive political action committee Justice Democrats.skip past newsletter promotionafter newsletter promotion“Not to take away from the student debt crisis – that’s incredibly important. But canceling student debt does not make people forget that you are aiding and abetting the ethnic cleansing and murder of nearly 30,000 Palestinian people and supporting a far-right extremist government in Israel that is doing it,” Andrabi said.Andrabi said addressing one outstanding issue while ignoring another is “almost patronizing” to young voters.“To think that they would all of a sudden forget that millions of them have been in the streets for months demanding a ceasefire is insufficient. It hasn’t cleaned the slate for what has happened to the Palestinian people,” Andrabi said.Many of the issues important to young voters – including student debt, climate justice, reproductive justice and the violence in Gaza – are “inseparable”, Andrabi argues. Financially contributing to the Israeli military while they drop bombs and rockets on the Gaza strip produce carbon emissions which heat the planet.“We’re also seeing a reproductive health crisis in Gaza,” Andrabi said, referencing the tens of thousands of pregnancies in Gaza classified as high-risk due to the violence.“It’s not that one issue is more important than the other – I think every voter has their own calculus. But to act like this is a completely separate issue for a group of voters would be incorrect, especially as we’re seeing so many of the same problems happen to the Palestinian people.”Strategists say Biden is likely relying on young voters supporting him as the candidate against Trump, rather than for his own policies as president. That’s why some Democrats in Michigan, like the US congresswoman Rashida Tlaib, are pushing voters to protest his stance on the Israel-Gaza war by marking themselves as “uncommitted” in the upcoming primary.“There’s a lot of frustration … and the administration not only needs to hear those concerns, but they need to feel them,” said Michael Starr Hopkins, a Democratic strategist. “One of the biggest mistakes they’ve made is not acknowledging people’s concern. They internalize them, but they don’t show externally that they’re taking it into consideration.”Hopkins noted that Biden’s strength can be conveying empathy. “He is always better when he comes out and acknowledges people’s pain and suffering.” More

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      ‘Totally devastating’: borrowers on the start of student loan repayment

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      Millions of Americans over the last three years experienced what it was like to live without student debt. For many, that meant hundreds of dollars a month that went toward life’s other expenses – rent, buying or maintaining a home, supporting family. The relief was also coupled with hope: Joe Biden announced in August 2022 a plan to cancel $10,000 in loans for low- and middle-income borrowers.But now, the reprieve for borrowers is coming to an end. Republicans forced an end to the pause in student debt repayments during the debt ceiling debate and student loans payments will begin again in October. In a second blow, the supreme court struck down Biden’s forgiveness plan earlier this summer.The impact is broad. About 12% of the US population has student loans, over 43 million Americans hold a collective $1.7tn in debt. The youngest borrowers have just graduated from college and some of the oldest have retired with student loans. Many parents who took out loans to pay for their children’s education are also still burdened by debt.The Guardian asked US student loan borrowers what forbearance meant for them. Their answers give a glimpse into the impact that student debt has beyond the numbers.‘We were able to afford our first home’Homeownership is the primary way Americans build their wealth. For many with student debt, buying a home can feel impossible. A poll from the National Association of Realtors from 2021 found that 60% of millennials who don’t own a home pointed to student debt as the main reason.But the payment pause, tied with low interest rates, allowed some student borrowers to put down a mortgage for their first home.Lauren Segarra, 41, a speech-language pathologist in Atlanta, Georgia, said the payment pause enabled her family to buy a home.“That extra cash put us over the threshold of being able to afford our first home,” Segarra said, adding that the pause – along with being in the Public Service Loan Forgiveness (PSLF) program – allowed her and her husband to save about $12,000 in cash. “We were able to responsibly put a down payment on a home without wiping out our savings.”The real estate company Zillow estimated that those with student loans in 29 out of the 50 largest housing markets in the US saved the equivalent of a 5% down payment on an entry-level home in their market, allowing people like Segarra to become homeowners.But the narrow window for affordable homeownership seems to have passed: Zillow reported that the principal and interest on a new home have now doubled since March 2020 because of record-high interest rates and soaring home prices. Now that payments are set to restart, homeownership for many will continue to be out of reach.‘I paid off $7,000 in medical debt’One out of 13 student loan borrowers are currently behind on other debt, a higher proportion than before the pandemic, the Consumer Financial Protection Bureau (CFPB) reported in June.Credit card debt has soared during the pandemic, especially over the last year as inflation reached record highs. The total amount of credit card debt in the US hit $1tn, the Federal Reserve Bank of New York reported in August, a record high. In a recent survey, 46% of those with credit card debt say they are still trying to pay off an emergency expense, including car or home repairs or medical bills. About a quarter said that everyday expenses, including groceries and childcare, have caused their bills to rack up.And this credit card debt is on top of other medical debt, which totaled $195bn in 2019. According to Kaiser Family Foundation Health News, one in 10 American adults owe more than $10,000 in medical debt.Lydia Gay, 36, a costume maker and tailor based in New York, said the student loan payment pause helped her pay off her medical debt.“It allowed me to save and pay off over $7,000 in debt from medical expenses, mostly from a couple of years of monthly insurance premiums,” she said. The Writers Guild of America (WGA) and Screen Actors Guild (Sag) strikes in Hollywood have meant she can only find part-time work, but “I have still been able to pay for rent and basics because I don’t have $400 a month coming out for student loans.”Gay said she is concerned about what the end of the pause will mean for her finances now, especially as there continues to be less work in her industry.“I’m extremely worried about being able to pay rent, bills and basics, along with student loans,” Gay said. “The stress and worry have even been affecting my sleep and mental health.”‘It allowed me to save money’A majority of Americans – as many as 61%, according to a recent survey – live paycheck to paycheck. More than one in five Americans don’t have emergency savings.For some student loan borrowers, forbearance empowered them to build up savings for the first time.“The pause has been a massive relief and allowed me to save more money,” said Brooke McGeorge, 26, a non-profit program assistant based in San Diego. “Knowing that loan repayment is kicking in again with no follow-through on promises for debt relief feels like a punch to the gut.”With forbearance ending, borrowers say they are worried about the strain that it will have on their finances once again.Ben Birkinbine, 41, an assistant professor based in Oshkosh, Wisconsin, had a daughter in late 2019, right before the pandemic began. During forbearance, his family moved back to Wisconsin to be closer to family. While the pause allowed him and his family to buy a home, he took a pay cut and has less job security.“Our budget is very tight and will be for at least another two years,” Birkinbine said, noting that childcare costs, in particular, have been rising. “Saving will be very difficult, and we will likely need to cut into existing savings to meet payments.”As much as the payment pause was a welcomed respite, the return to payments for many borrowers feels a bit like betrayal, especially when $10,000 in forgiveness seemed to be a reality just a year ago.McGeorge, echoing the frustration of fellow borrowers, said she is frustrated that the supreme court blocked Biden’s forgiveness plan, which many had hoped would help ease repayments starting.“It’s totally devastating,” she said. “Americans should have a chance to be optimistic about the future, but things that used to be so basic like affording good food and buying a home, are feeling more and more like a pipe dream.” More

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      Biden says his student loan relief is ‘life-changing’. Will it fix the system’s inequities?

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      Biden says his student loan relief is ‘life-changing’. Will it fix the system’s inequities?The initiative’s income cap and unclear bureaucratic process could fail to address the racial disparities that already exist01:15As Joe Biden announced the details of his plan to help those with student loan debt, Kat Welbeck wrestled with the idea. For millions of Americans, the unprecedented relief would be “life-changing”, especially for low-income and Black and Latino Americans, who are disproportionately saddled with decades-long debt, she said.But the plans’ income cap on who can receive cancellation, and its unclear bureaucratic process for Americans seeking debt relief could perpetuate the inequities that underpin the nation’s student loan system, Welbeck, director of advocacy and civil rights counsel for the Student Borrower Protection Center, said.Student loan forgiveness: what you need to know about Biden’s planRead more“While a $10,000 cancellation is so meaningful for millions of student loan borrowers, there’s a lot that’s still to be done to fix this student debt crisis,” Welbeck says.On Wednesday, the White House released its long-anticipated plan on how to tackle the nation’s mounting $1.6tn student loan debt, accounting for more than 43 million people, with almost a third owing less than $10,000, according to federal data.The initiative would cancel up to $10,000 in debt for borrowers who earn less than $125,000 a year ($250,000 for married couples). Borrowers whose low income level qualified them for a Pell Grant will receive up to $20,000 in relief. The White House also extended a pause for “one final time” on student loan payments through January.The White House has projected that the plan would eliminate full debt balances for 20 million Americans and that 90% of debt relief dollars would go toward people with incomes less than $75,000. The White House also touted it as an effort to “advance racial equity”, pointing to its targeted relief for those who received Pell Grants. Officials noted that Black Americans were twice as likely to receive such grants as white Americans.Senator Elizabeth Warren, who, like others, have advocated for cancelling at least $50,000 in student debt, praised the administration’s plan as “transformative for the lives of working people all across the country” and would “help narrow the racial wealth gap among borrowers”.Still, some argue that the cancellation of just $10,000 for most borrowers would fail to substantially affect the racial disparities within the student loan system. Black and Latino borrowers disproportionately come from poorer households and, as a result, take on more debt than white Americans. At the same time, white American households have, on average, 10 times the wealth of Black households.Derrick Johnson, president of the NAACP, which had been advocating for cancellation of $50,000, wrote in an op-ed that Biden’s plan would “do little to help” Black Americans who, on average, hold nearly twice as much student debt as white borrowers. “Canceling just $10,000 of debt is like pouring a bucket of ice water on a forest fire,” he said. Canceling $10,000 in student debt when the average white borrower is $12,000 in debt, while Black women hold on average over $52,000 isn’t just unacceptable, it’s structural racism.— Nina Turner (@ninaturner) August 23, 2022
      The emphasis on income in the White House’s cap represents a possible barrier that could exclude borrowers of color who meet the income threshold yet their families lack the wealth to tackle the debt, Welbeck says. A June 2020 report from the Student Borrower Protection Center found that 90% of Black Americans and 72% of Latino Americans took out student loans, a far cry from the 66% of white Americans.And 20 years after graduating college, the median Black borrower still owed 95% of their original debt while the median white borrower paid down the same amount. For Latinos, after 12 years, they owed 83% of their original debt, more than the white borrower over the same time.Given that Black and Latino Americans typically earn less than white Americans, borrowers of color will start from behind without the intergenerational wealth available to reduce the debt they already hold.“So if you’re already coming from a lower-wealth household, you now have more debt, and then that cuts into opportunities for you to build wealth for the next generation,” Welback says. “You might see higher-income households that are Black or Latino, but that does not take away the fact that you still have those wealth disparities.”Student loan forgiveness: what does it mean for the US debt crisis?Read moreHistorically, the education department has complicated access to loan forgiveness through the programs it creates, such as the Public Service Loan Forgiveness program for non-profit and public service workers seeking relief and the borrower defense program for those who were defrauded by predatory for-profit colleges.The White House initiative does nothing to address private student loan debt, which accounts for more than $140bn in debt. Although Latino borrowers were more than twice as likely to report struggling with private student loan debt as white borrowers, Black borrowers were a staggering four times as likely to fall behind on private debt payments, according to the Student Borrower Protection Center.An application process could make it harder for people to access relief, Welbeck says. But recent decisions by the education department to automatically discharge debts for hundreds of thousands of students who attended ITT Technical Institute and Corinthian Colleges, two for-profit college chains that imploded, show that a widespread relief without bureaucratic hurdles is possible. The two debt cancellations at the for-profit institutions amounted to roughly $10bn affecting more than 700,000 students.“The student debt crisis is a result of the longstanding history of racial discrimination that we have in our country, and it continues to perpetuate them,” Welback says. “So until we address student debt as a civil rights crisis, we’re not going to be able to make meaningful gains toward equity.”TopicsUS student debtBiden administrationUS student financeRaceJoe BidenUS politicsUS educationnewsReuse this content More

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      Student loan forgiveness: what you need to know about Biden’s plan

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      ExplainerStudent loan forgiveness: what you need to know about Biden’s planWho qualifies and how to apply for the forgiveness plan, and will the student loan payment freeze be extended? President Joe Biden said Wednesday that many Americans can have up to $10,000 in federal student loan debt forgiven. That amount increases to $20,000 if they qualified for Pell grants. Here’s what we know so far and what it means for people with outstanding student loans:Who qualifies for student loan forgiveness? You qualify to have up to $10,000 forgiven if your loan is held by the Department of Education and you make less than $125,000 individually or $250,000 for a family. If you received Pell grants, which are reserved for undergraduates with the most significant financial need, you can have up to $20,000 forgiven. If you are a current borrower and a dependent student, you will be eligible for relief based on your parents’ income, rather than your own.Will the student loan payment freeze be extended?The payment freeze will be extended one last time, until 31 December. The freeze started in 2020 as a way to help people struggling financially during the Covid-19 pandemic and it’s been extended several times since. It was set to expire on 31 August.Interest rates will remain at 0% until repayments start. Under an earlier extension announced in April, people who were behind on payments before the pandemic will automatically be put in good standing.How do I apply for student loan forgiveness?Details of that have not been announced, but keep an eye on the federal student aid website for more details in coming days.What’s a Pell grant and how do I know if I have one?Roughly 27 million borrowers who qualified for Pell grants will be eligible to receive up to $20,000 in forgiveness under the Biden plan.Pell grants are special government scholarships for lower-income Americans, who currently can receive up to $6,895 annually for roughly six years.Pell grants themselves don’t generally have to be paid back, but recipients typically take out additional student loans.“This additional relief for Pell borrowers is also an important piece of racial equity in cancellation,” said Kat Welbeck, Civil Rights Counsel for the Student Borrower Protection Center. “Because student debt exacerbates existing inequities, the racial wealth gap means that students of color, especially those that are Black and Latino, are more likely to come from low-wealth households, have student debt, and borrow in higher quantities.”To find out if you have a Pell grant, check any emails you’ve received that describe your FAFSA award.How many people will this help? About 43 million Americans have federal student debt, with an average balance of $37,667, according to federal data. A third of those owe less than $10,000. Half owe less than $20,000. The total amount of federal student debt is more than $1.6tn.What if I’ve already paid off my student loans – will I see relief? The debt forgiveness is expected to apply only to those currently holding student debt. But if you’ve voluntarily made payments since March 2020, when payments were paused, you can request a refund for those payments, according to the Federal Office of Student Aid. Contact your loan servicer to request a refund.Will student loan forgiveness definitely happen?The White House is expected to face lawsuits over the plan, because Congress has never given the president the explicit authority to cancel debt. We don’t know yet how that might impact the timetable for student loan forgiveness.What repayment plan is the Department of Education proposing? The Department of Education has proposed a repayment plan that would cap monthly payments at no more than 5% of a borrower’s discretionary income, down from 10% now. Borrowers will need to apply for the repayment plan if it’s approved, which could take a year or more.For example, under the proposal, a single borrower making $38,000 a year would pay $31 a month, according a government press release.The amount considered non-discretionary will also be increased, through the department has not said how much.Discretionary income usually refers to what you have left after covering necessities like food and rent, but for student loan repayment purposes it’s calculated using a formula that takes into account the difference between a borrower’s annual income and the federal poverty line, along with family size and geographic location.What if I can’t afford to pay even with loan forgiveness? Once payments resume, borrowers who can’t pay risk delinquency and eventually default. That can hurt your credit rating and mean you’re not eligible for additional aid.If you’re struggling to pay, check if you qualify for an income-driven repayment plan. You can find out more here.The plan Biden announced on Wednesday also includes a proposal that would allow people with undergraduate loans to cap repayment at 5% of their monthly income. Proposals like this one can take a year or more to be implemented, and it’s not clear what the fine print will be.If you have worked for a government agency or a non-profit organization, you could also be eligible for the Public Service Loan Forgiveness Program, which you can read more about here.TopicsUS student debtUS personal financeUS student financeUS politicsUS income inequalityexplainersReuse this content More

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      Student loan forgiveness: what does it mean for the US debt crisis?

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      ExplainerStudent loan forgiveness: what does it mean for the US debt crisis? The $1.7tn debt has become a hot political issues as midterm elections approachAmerica’s students have a debt problem. A big one. More than 45 million Americans – more than the population of California – now owe a collective $1.7tn in student debt.The vast majority of the money is owed to the federal government, which has been backing or directly offering student loans for higher education since 1958. While student loans are not new in the United States, the amount of student debt has more than tripled over the last 16 years.For the first time in history, the federal government will cancel a large swath of student debt to address the crisis. On Wednesday, Joe Biden announced borrowers who make less than $125,000 a year will see $10,000 shaved off their debt. Most borrowers will qualify for some cancellation. For at least 15 million, that means complete erasure of their debt.Student debt will remain a hot political issue. Understanding the impact of such a dramatic policy requires unpacking the student debt crisis, beginning with its origins.How the student debt crisis startedIn 1957 the Soviet Union successfully launching the first earth-orbiting satellite, Sputnik. With the cold war raging the federal government feared the US education system was failing to produce enough scientists and engineers to compete with the Soviets and, in 1958, started handing out student loans through the National Defense Education Act.Nearly a decade later, the Higher Education Act of 1965 allowed more people to take out loans as the federal government promised to pay back banks for any loans that were not repaid.“It all started from this choice, which I think was a terrible choice, to decide that as a policy matter we should support higher education … by giving [students] an opportunity to get a loan,” said Dalié Jimenez, professor of law and director of the Student Loan Law Initiative at the University of California at Irvine. “It was just a terrible mistake.”Starting in 2010, the federal government started directly lending money to student borrowers. In the wake of the Great Recession, the amount of student debt began to increase rapidly. Colleges were seeing increased enrollment as people left the workforce to go back to school. States slashed their higher education budgets, leading to higher tuition. More students were turning to for-profit colleges, which tend to be more expensive than public colleges.Over the last few years, the amount of grant aid, which does not need to be paid back, has risen. Yet despite this appearance of more financial support for students to attend college, the cost of attendance has remained the same.Two line charts comparing the gap between the listed price and what it actually costs to attend public and non-profit private institutions.The cost of attending public college has actually increased at a higher rate than the cost to attend a private college. The net cost of attendance for four-year public colleges, which takes into account any grants students receive, went from $17,500 in 2006 to $20,210 in 2016, according to data from College Board.Line chart of the costs of public and private non-profit increasing and then slightly decreasing from 2006-07 to 2020-21 school years.“That era 10 years ago was a really formative moment for producing a lot of debt that’s still out there,” said Kevin Miller, associate director for higher education at the Bipartisan Policy Center’s Economic Policy Project. “The cost of college attendance has gone up a lot while household incomes in the United States haven’t … there’s a real sense that if grant, state or institutional aid isn’t filling the gap, that just leaves debt as the only option.”What student debt looks like todayFor the 2021-2022 school year, the average cost of tuition and fees for a four-year public college is $10,740. The cost is nearly quadrupled for private institutions, at an average of $38,070. Even with grant aid, the cost of attendance is an average of $19,230 for public institutions and $32,720 at private schools.Estimates put the average debt of those in the class of 2019 who took out student loans at $28,950. The number is close to the maximum $31,000 that students who are dependents of parents or guardians can borrow from the federal government to fund undergraduate education.Area chart of student debt increasing from Q1 2006 to Q1 2022.Continuing racial wealth disparities are reflected in who has to take out loans to fund college. About half of Black college students take out student loans, compared with 40% of white students. Black Americans owe an average of $25,000 more in debt than their white counterparts and are more likely to be behind on their payments.Despite the amount of debt many students need to take on to attend college, nearly 20 million Americans still enroll in college every year. While earnings can depend on a person’s industry, those with a bachelor’s degrees earn 75% more in their lifetime than those with just a high school diploma.“The message is you have to get a college degree. It’s not just a rhetorical message, it’s an actual truth that if you don’t have a college degree, particularly if you are Black or brown … you will not be able to get a job that is better than your parents’,” Jimenez said.Those with graduate and professional degrees earn even more, but the price for an advanced degree is even higher. A good chunk of student debt – about 40% – is held by those who took out loans to pay for graduate school.What the government has done to address student debtAfter over a year of deliberation, the White House announced on Wednesday the largest student debt cancellation in US history. Federal borrowers making under $125,000 will see $10,000 of their debt forgiven. The policy represents a fulfillment of a promise Biden made on the campaign trail to cancel $10,000 of student debt.Until Wednesday, the most substantial policy addressing student debt was first implemented by the Trump administration, which paused student loan payments and interest accrual at the beginning of the Covid-19 pandemic. Both Trump and Biden extended the pause over the last two years, and it is now set to expire on 31 August.Since the beginning of this year, Biden has announced a slate of additional policies alongside the pause extension. Those who have defaulted or are delinquent on their federal student loans will be returned to good standing. Biden forgave $415m in student debt for borrowers who attended predatory for-profit schools.His administration also announced changes to the Public Service Loan Forgiveness Program, which forgives the student loans of borrowers who are non-profit and government employees after 10 years of debt or after 120 payments are made. Over 113,000 borrowers with a cumulative $6.8bn in debt are now eligible for forgiveness. Over the years, the program has been under much criticism, as relief through the program was rare and borrowers were often deemed not qualified for logistical reasons.The debate over debt forgivenessRepublicans have been using student debt as a talking point against Biden as the midterm elections approach.Senator Mitt Romney suggested that Democrats canceling student loans is a way of bribing voters. “Other bribe suggestions: Forgive auto loans? Forgive credit card debt? Forgive mortgages?” he wrote on Twitter. JD Vance (who went to Yale Law School) told the Washington Post that “Biden essentially wants blue-collar workers like truck drivers – who didn’t have the luxury of going to college to get drunk for four years – to bail out a bunch of upper-middle-class kids.”The reality is that the student loans of those in the highest income quartile – people making more than $97,000 – do make up a third of all outstanding student debt. But many low-income Americans also have student debt, though the amount of debt they have is smaller. Those making below $27,000 a year make up 17% of all borrowers, but their loans comprise 12% of all the outstanding debt.An income threshold could be a way for the government to target forgiveness to those who need it most. But some have pointed out that an income ceiling does not take into consideration a person’s wealth.“You’re looking at a snapshot of what your income was this year or last year, that tells you very little,” Jimenez said. “If your family has no wealth, you’re very differently situated from someone who has family wealth or personal wealth from previous careers.”Those who have been advocating for student debt cancellation say that $10,000 in forgiveness will not be enough to address the breadth of the crisis. Democratic lawmakers, including Senate majority leader Chuck Schumer, Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez, have called on Biden to cancel up to $50,000.“I don’t believe in a cutoff, especially for so many of the frontline workers who are drowning in debt and would likely be excluded from relief,” Ocasio-Cortez told the Washington Post. “Canceling $50,000 in debt is where you really make a dent in inequality and the racial gap. $10,000 isn’t.”Ending the student debt crisis for goodEven though millions will now see debt cancellation, future college students will continue to take out loans – and at higher interest rates. Tackling the price tag of college will come with its own complications, but advocates say it will be necessary to ensure student debt does not get worse.While Biden’s plan for free community college was killed along with the rest of the social and climate spending bill that was making its way through Congress, some efforts for better college funding are happening at the local level.In March, the governor of New Mexico signed a bill that would use $75m in state funds to cover tuition and fees for undergraduate students at two- and four-year colleges. Drives for similar government support have been seen in Pennsylvania, California and Maine.“The cost of college is too high for a lot of students to manage without debt. Making it so that students can go without debt or take less debt in the first place is the thing that we really need to be focusing on,” Miller said. “What about the next generation or the one after that?”
      This article was amended. An earlier version stated that student debt had doubled over 16 years. In fact, it has more than tripled.
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      How the US student loan debt crisis started — and how it could end

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      How the US student loan debt crisis started — and how it could end The $1.8tn debt has become a hot political issues as midterm elections approachAmerica’s students have a debt problem. A big one. More than 45 million Americans – more than the population of California – now owe a collective $1.7tn in student debt.What to do about that debt has become a hot political issues as midterm elections approach.The vast majority of the money is owed to the federal government, which has been backing or directly offering student loans for higher education since 1958. While student loans are not new in the United States, the amount of student debt has more than tripled over the last 16 years.The Biden administration has recently hinted that some form of student debt forgiveness could be announced soon – specifically, canceling at least $10,000 in student debt for Americans earning less than $125,000 a year. With that threshold, most student loan borrowers will qualify for some debt forgiveness.If the executive action is undertaken, it will be the first large debt cancellation by the federal government to address the student debt crisis. Understanding the impact of such a dramatic policy requires unpacking the student debt crisis, beginning with its origins.How the student debt crisis startedIn 1957 the Soviet Union successfully launching the first earth-orbiting satellite, Sputnik. With the cold war raging the federal government feared the US education system was failing to produce enough scientists and engineers to compete with the Soviets and, in 1958, started handing out student loans through the National Defense Education Act.Nearly a decade later, the Higher Education Act of 1965 allowed more people to take out loans as the federal government promised to pay back banks for any loans that were not repaid.“It all started from this choice, which I think was a terrible choice, to decide that as a policy matter we should support higher education … by giving [students] an opportunity to get a loan,” said Dalié Jimenez, professor of law and director of the Student Loan Law Initiative at the University of California at Irvine. “It was just a terrible mistake.”Starting in 2010, the federal government started directly lending money to student borrowers. In the wake of the Great Recession, the amount of student debt began to increase rapidly. Colleges were seeing increased enrollment as people left the workforce to go back to school. States slashed their higher education budgets, leading to higher tuition. More students were turning to for-profit colleges, which tend to be more expensive than public colleges.Over the last few years, the amount of grant aid, which does not need to be paid back, has risen. Yet despite this appearance of more financial support for students to attend college, the cost of attendance has remained the same.Two line charts comparing the gap between the listed price and what it actually costs to attend public and non-profit private institutions.The cost of attending public college has actually increased at a higher rate than the cost to attend a private college. The net cost of attendance for four-year public colleges, which takes into account any grants students receive, went from $17,500 in 2006 to $20,210 in 2016, according to data from College Board.Line chart of the costs of public and private non-profit increasing and then slightly decreasing from 2006-07 to 2020-21 school years.“That era 10 years ago was a really formative moment for producing a lot of debt that’s still out there,” said Kevin Miller, associate director for higher education at the Bipartisan Policy Center’s Economic Policy Project. “The cost of college attendance has gone up a lot while household incomes in the United States haven’t … there’s a real sense that if grant, state or institutional aid isn’t filling the gap, that just leaves debt as the only option.”What student debt looks like todayFor the 2021-2022 school year, the average cost of tuition and fees for a four-year public college is $10,740. The cost is nearly quadrupled for private institutions, at an average of $38,070. Even with grant aid, the cost of attendance is an average of $19,230 for public institutions and $32,720 at private schools.Estimates put the average debt of those in the class of 2019 who took out student loans at $28,950. The number is close to the maximum $31,000 that students who are dependents of parents or guardians can borrow from the federal government to fund undergraduate education.Area chart of student debt increasing from Q1 2006 to Q1 2022.Continuing racial wealth disparities are reflected in who has to take out loans to fund college. About half of Black college students take out student loans, compared with 40% of white students. Black Americans owe an average of $25,000 more in debt than their white counterparts and are more likely to be behind on their payments.Despite the amount of debt many students need to take on to attend college, nearly 20 million Americans still enroll in college every year. While earnings can depend on a person’s industry, those with a bachelor’s degrees earn 75% more in their lifetime than those with just a high school diploma.“The message is you have to get a college degree. It’s not just a rhetorical message, it’s an actual truth that if you don’t have a college degree, particularly if you are Black or brown … you will not be able to get a job that is better than your parents’,” Jimenez said.Those with graduate and professional degrees earn even more, but the price for an advanced degree is even higher. A good chunk of student debt – about 40% – is held by those who took out loans to pay for graduate school.What the government has done to address student debtThe most substantial policy addressing student debt was first implemented by the Trump administration, which paused student loan payments and interest accrual at the beginning of the Covid-19 pandemic. Both Trump and Biden extended the pause over the last two years, and it is now set to expire on 31 August.Since the beginning of this year, Biden has announced a slate of additional policies alongside the pause extension. Those who have defaulted or are delinquent on their federal student loans will be returned to good standing. Biden forgave $415m in student debt for borrowers who attended predatory for-profit schools.His administration also announced changes to the Public Service Loan Forgiveness Program, which forgives the student loans of borrowers who are non-profit and government employees after 10 years of debt or after 120 payments are made. Over 113,000 borrowers with a cumulative $6.8bn in debt are now eligible for forgiveness. Over the years, the program has been under much criticism, as relief through the program was rare and borrowers were often deemed not qualified for logistical reasons.The debate over debt forgivenessEven as it seems Biden is prepared to cancel some debt, the idea has gotten some criticism over the last few months.Republicans have been using student debt as a talking point against Biden as the midterm elections start rolling.Senator Mitt Romney suggested that Democrats canceling student loans is a way of bribing voters. “Other bribe suggestions: Forgive auto loans? Forgive credit card debt? Forgive mortgages?” he wrote on Twitter. JD Vance (who went to Yale Law School) told the Washington Post that “Biden essentially wants blue-collar workers like truck drivers – who didn’t have the luxury of going to college to get drunk for four years – to bail out a bunch of upper-middle-class kids.”The reality is that the student loans of those in the highest income quartile – people making more than $97,000 – do make up a third of all outstanding student debt. But many low-income Americans also have student debt, though the amount of debt they have is smaller. Those making below $27,000 a year make up 17% of all borrowers, but their loans comprise 12% of all the outstanding debt.An income threshold could be a way for the government to target forgiveness to those who need it most. But some have pointed out that an income ceiling does not take into consideration a person’s wealth.“You’re looking at a snapshot of what your income was this year or last year, that tells you very little,” Jimenez said. “If your family has no wealth, you’re very differently situated from someone who has family wealth or personal wealth from previous careers.”Those who have been advocating for student debt cancellation say that $10,000 in forgiveness will not be enough to address the breadth of the crisis. Democratic lawmakers, including Senate majority leader Chuck Schumer, Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez, have called on Biden to cancel up to $50,000.“I don’t believe in a cutoff, especially for so many of the frontline workers who are drowning in debt and would likely be excluded from relief,” Ocasio-Cortez told the Washington Post. “Canceling $50,000 in debt is where you really make a dent in inequality and the racial gap. $10,000 isn’t.”Ending the student debt crisis for goodEven if Biden forgives some student debt, future college students will continue to take out loans – and at higher interest rates. Tackling the price tag of college will come with its own complications, but advocates say it will be necessary to ensure student debt does not get worse.While Biden’s plan for free community college was killed along with the rest of the social and climate spending bill that was making its way through Congress, some efforts for better college funding are happening at the local level.In March, the governor of New Mexico signed a bill that would use $75m in state funds to cover tuition and fees for undergraduate students at two- and four-year colleges. Drives for similar government support have been seen in Pennsylvania, California and Maine.“The cost of college is too high for a lot of students to manage without debt. Making it so that students can go without debt or take less debt in the first place is the thing that we really need to be focusing on,” Miller said. “What about the next generation or the one after that?”
      This article was amended on 26 May 2022. An earlier version stated that student debt had doubled over 16 years. In fact, it has more than tripled.
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      Biden isn’t serious about forgiving student debt. ‘Means-testing’ is a con | David Sirota

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      Biden isn’t serious about forgiving student debt. ‘Means-testing’ is a conDavid Sirota and Andrew PerezThe Biden administration’s proposal is cynicism masquerading as populism – and it will enrage everyone and hurt the Democrats’ electoral chances During the 2020 Democratic primary, Pete Buttigieg’s personal ambition led him to poison the conversation about education in America. Desperate for a contrast point with his rivals, the son of a private university professor aired ads blasting the idea of tuition-free college because he said it would make higher education “free even for the kids of millionaires.”The attack line, borrowed from former secretary of state Hillary Clinton, was cynicism masquerading as populism. It was an attempt to limit the financial and political benefits of a proposal to make college free. Worse, it was disguised as a brave stand against the oligarchs bankrolling Buttigieg’s campaign, even though it actually wasn’t – almost no rich scions would benefit from free college.Buttigieg and copycats like Amy Klobuchar were pushing a larger lie. Call it the means-testing con – the idea that social programs should not be universal, and should instead only be available to those who fall below a certain income level. It is a concept eroding national unity and being carried forward by wealthy pundits and a Democratic party that has discarded the lessons of its own universalist triumphs like social security, Medicare and the GI Bill.This week the Biden administration tore a page from Buttigieg’s book. The White House leaked that it is considering finally following through on Joe Biden’s promise to cancel some student debt – but not the $50,000 pushed by congressional Democrats, and only for those below an income threshold.In trial-ballooning the college debt relief proposal, the president is boosting the media-manufactured fiction that real, universal college debt relief would mostly help rich Ivy League kids – even though data from the Roosevelt Institute conclusively proves that canceling student debt “would provide more benefits to those with fewer economic resources and could play a critical role in addressing the racial wealth gap and building the Black middle class”.As the report points out: “People from wealthy backgrounds (and their parents) rarely use student loans to pay for college.”But setting aside how the media-driven discourse omits those inconvenient facts, what’s noteworthy here is the underlying principle.This latest discussion of means-testing follows Biden and congressional Democrats pushing to substantially limit eligibility for Covid-19 survival checks and the expanded child tax credit. Taken together, it suggests that Democrats’ zeal for means-testing is no anomaly – it is a deeply held ideology that is both dangerous for the party’s electoral prospects and for the country’s fraying social contract.The superficial appeal of means-testing is obvious: it promises to prevent giving even more public money to rich people who don’t need it.But in practice, means-testing is a way to take simple universal programs and make them complicated and inaccessible. Calculating exact income levels and then proving them for eligibility means reams of red tape for both the potential beneficiary and a government bureaucracy that must be created to process that paperwork.Data from the food stamp and Medicaid programs illustrate how means-testing creates brutal time and administrative barriers to benefits, which reduce payouts to eligible populations. In the case of means-testing student debt relief, those barriers may end up wholly excluding large swaths of working-class debtors.This is a feature, not a bug – it is means-testers’ unstated objective. They want to limit benefits for the working class, but not admit that’s their goal.Universal programs like social security and Medicare were what we once defined as “society” or “civilization”. They may be derided as “entitlements”, but the reason they have (so far) survived for so long is because their universality makes them wildly successful in their missions and more difficult to demonize. Their universality also precludes austerians from otherizing and disparaging the programs’ recipients.Means-testing destroys that potential unity. It may initially poll well, but it turns “entitlements” into complicated “welfare” programs only for certain groups, which then makes those programs less popular and makes the beneficiaries easy scapegoats for political opportunists. Think of Ronald Reagan’s “welfare queen” trope vilifying recipients of means-tested food stamps.Now sure, billionaires are eligible for social security and Medicare, and their kids are eligible for free K-12 education – and that aristocracy doesn’t need that help. But when those programs were created, we accepted that rich people being granted access to those programs along with everyone else was the relatively small price to pay for simplicity, universalism and the attendant national unity that comes with it.Not surprisingly, Democrats’ creation of popular universalist programs coincided with the most electorally successful era in the party’s history.Equally unsurprising: the shift to fake means-test populism has coincided with rising popular hatred of liberal technocrats and the Democratic party they control.What is surprising is that Republicans may be starting to understand all this better than Democrats.For instance, Donald Trump’s signature spending legislation offered direct, non-means-tested aid to small businesses during the pandemic. The former president touted a plan to just pay hospital bills for Covid patients who didn’t have coverage. The programs were hardly perfect, but they were straightforward, universal, relatively successful and extremely popular because they embodied a powerful principle: keep it simple, stupid.When it comes to student debt relief, there’s a rare chance for Democrats to also embrace simplicity – and prevent Republicans from outflanking them.More specifically, they can use the student debt crisis to finally return to their universalist roots – and they don’t have to skimp and provide merely $10,000 worth of relief.Biden could simply send out a one-page letter to every student borrower telling them that their federal student debt is now $0.Yes, Republican lawmakers would try to block it and affluent pundits would tweet-cry about it to each other.But amid all that elite whining and couch-fainting, Democrats would be launching a battle against an immoral system of education debt – and directly helping 40 million voters ahead of a midterm election.It’s so easy and simple – which is probably why they won’t do it.
      David Sirota is a Guardian US columnist and an award-winning investigative journalist. He is an editor-at-large at Jacobin, and the founder of the Lever. He served as Bernie Sanders’ presidential campaign speechwriter
      Andrew Perez is a senior editor at The Lever and a co-founder of the Democratic Policy Center
      A version of this piece was first published in the Lever, a reader-supported investigative news outlet
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