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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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      Biden unveils plan to cancel $10,000 in student loan debt for millions

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      Biden unveils plan to cancel $10,000 in student loan debt for millionsPresident delivers on campaign promise and outlines debt relief measures for those on lower incomes in White House speech01:15Millions of Americans received welcome news on Wednesday when Joe Biden delivered on a campaign promise to provide $10,000 in student debt forgiveness.Borrowers who earn less than $125,000 a year will be eligible for loan forgiveness, with those whose low incomes qualified them for federal Pell Grants receiving up to $20,000 in relief. About a third of US undergraduate students receive Pell Grants.Biden also extended a pause on federal student loan payments through the end of the year. The White House said it would be the last pause, and borrowers should expect to resume payments in January.If it survives probable legal challenges, Biden’s plan could offer a windfall to many Americans in the run-up to midterm elections in November. More than 45 million owe a combined $1.7tn in federal student debt. Almost a third owe less than $10,000, according to federal data.Biden also proposed a new income-driven repayment plan that would cap loans for low-income future borrowers and introduce fixes to the loan forgiveness program for non-profit and government workers.“Twelve years of universal education is not enough,” Biden said, announcing the plan at the White House. “How do we remain the most competitive nation in the world with the strongest economy in the world with the greatest opportunities?“That’s what today’s announcement is about. It’s about opportunity. It’s about giving people a fair shot. It’s about the one word America can be defined by: ‘possibilities’. It’s about providing possibilities.Biden noted that the federal government gave loans to small businesses during the Covid pandemic.“Now, it’s time to address the burden of student debt the same way.”Biden added that “an entire generation is now saddled with unsustainable debt.“The burden is so heavy that even if you graduate, you may not have access to the middle-class life that the college degree once provided. The burden is especially heavy on Black and Hispanic borrowers who, on average, have less family wealth to pay for it.”Biden said more information on the plan would soon be released and borrowers who qualify for forgiveness could expect a “short and simple form to apply for this relief”, sent by the Department of Education.The US has a long history of student debt, the vast majority owed to the federal government, which has been offering loans for college since 1958. US student debt has more than tripled over the last 16 years.Senior Democrats on Capitol Hill cheered Biden’s announcement. The Senate majority leader, Chuck Schumer, and the Massachusetts senator Elizabeth Warren, a longtime advocate of the policy, issued a joint statement.They said: “With the flick of a pen, President Biden has taken a giant step forward in addressing the student debt crisis by cancelling significant amounts of student debt for millions of borrowers.“The positive impacts of this move will be felt by families across the country, particularly in minority communities, and is the single most effective action that the president can take on his own to help working families and the economy.”The senators added that Democrats would continue with efforts “to help close the racial wealth gap for borrowers and keep our economy growing”.Biden has faced pressure from liberals to provide broader relief. The cancellation falls short of the $50,000 many activist groups wanted. Some groups have called for full student debt cancellation.“If we can cancel $10k, we can cancel it all,” the Debt Collective, a union of debtors, tweeted on Wednesday.Administration officials claimed the plan could reduce inflation. The top Senate Republican, Mitch McConnell, argued that it would worsen the problem.McConnell said: “Biden’s student loan socialism is a slap in the face to every family who sacrificed to save for college, every graduate who paid their debt, and every American who chose a certain career path or volunteered to serve in our armed forces in order to avoid taking on debt. This policy is astonishingly unfair.”Biden’s continuation of the pandemic loan payment freeze came just days before millions were set to find out when their next student loan bills were due. The end of the payment freeze extension was set for 31 August.During the 2020 presidential campaign, Biden was initially skeptical of student debt cancellation as he faced progressive candidates including Warren and Bernie Sanders, the democratic socialist senator from Vermont.On Wednesday, Sanders hailed “a great step forward” but said: “We have got to do more.”New York special election victory gives Democrats hope for midterms – liveRead moreAs he tried to shore up support among younger voters, Biden unveiled a proposal for debt cancellation of $10,000 per borrower, with no mention of an income cap. That campaign promise was narrowed in recent months by embracing the income limit.Democrats pushed the administration to go as broad as possible, seeing debt relief as a galvanizing issue, particularly for Black and young voters.‘There’s been a dramatic shift in how Americans think about the role of government in helping people out for college,” said Brian Powell, professor of sociology at Indiana University Bloomington who co-authored a book on the student loan crisis.Powell noted that support for debt cancellation and college affordability has grown. Those who go to college make on average $30,000 more a year than those with just a high school degree.TopicsUS student debtJoe BidenUS politicsUS educationUS domestic policynewsReuse 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.
      TopicsUS student debtUS personal financeEconomicsBiden administrationUS politicsexplainersReuse this content More

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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
      TopicsUS student debtOpinionUS politicsBiden administrationJoe BidenDemocratsUS CongressUS student financecommentReuse this content More

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      ‘Killing the middle class’: millions in US brace for student loan payments after Covid pause

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      ‘Killing the middle class’: millions in US brace for student loan payments after Covid pauseStudent debt in America has become a crisis for millions of citizens that often feels like it will last for people’s whole lives Jennifer Rae Wilson, a social worker and single mother of three children in Richland, Washington, has struggled with student loan debt since she went back to school and graduated in 2000 – more than two decades ago.Struggling to raise three boys with very little child support, Wilson decided to attend college 10 years after graduating high school to improve her career prospects. She was eventually able to move out of low-income assistance housing and off government assistance programs.“But then the school loans hit,” said Wilson. “I couldn’t afford the payments on top of rent and all of the other things, there was no way that I could make those payments.”She is not alone, as student debt in America has become a crisis for millions of citizens that often feels like it will last for people’s whole lives, or at least blight them for many years to come after graduation. Around 44.7 million Americans have outstanding student loan debt totaling over $1.86tn, with 42.3 million Americans holding federal student loan debt.The US Department of Education paused repayment, collections and interest on federal student loans in response to the Covid-19 pandemic under Trump, with the final extension on the pause set to expire on 31 January 2022.But now millions of Americans are bracing for resuming payments on federal student loans after nearly two years of relief – and the crisis is set to roll on again.Between rent, bills and daycare costs, Wilson went into default after not being able to keep up with student loan payments. Then her paychecks started being garnished in 2010 to pay off the student loans of around $1,000 per month, which was just paying off the interest on her principal.The pause on student loan repayments during the pandemic allowed Wilson to catch up on other bills and purchase a home, but she worries about the payments restarting.“It kind of concerns me a little bit with it coming back with what they’re going to be able to offer us in terms of payment plans,” added Wilson. “I’ve been making payments for 20 years and my balance has only gone up. That doesn’t make any sense. If I made a $1,000 per month payment on my car, or on my house, I would be paid off and I would not have a home loan or would not have a car loan. But with this, it doesn’t seem to make a difference.”A recent survey of more than 33,000 student loan borrowers conducted by the Student Debt Crisis Center found 89% of borrowers are not financially secure enough to resume payments on 1 February. Prior to the pandemic, over half of all student loan borrowers were either in default, forbearance, deferment, or otherwise not currently making payments on their student debt.PJ Rivera of Texas is one of the borrowers not prepared to resume student loan payments. His initial student debt was around $80,000, but has increased with interest to $110,000, despite making payments of $1,000 a month.“Student loans have crippled my ability to have personal savings but the inability to help my family who are struggling with hospital bills and other medical bills,” said Rivera. “The system doesn’t work. It’s not the students’ fault because you need money to pay for your career. Maybe tuition shouldn’t be so high to start with. Everyone should be able to study and learn about whatever they are passionate about without going broke or living to pay and nothing else.”The average student loan debt for new college graduates is around $30,000. Joe Biden campaigned on cancelling $10,000 in student loan debt per person and cancelling student debt for Americans who attended Historically Black Colleges and Universities and public colleges, but the Biden Administration has yet to cancel debt for these AmericansBeverly Dunker Brown of New York City completed her undergraduate and graduate degrees in the 1980s and 90’s, but with high interest rates and taking on parent plus loans for her son, her student loan debt has increased from around $43,000 in loans to over $150,000.“I will be in my late 80s paying student loans off of social security income,” said Dunker Brown. “I have Federal Family Education Loan Program loans which were not paused. I can’t afford to pay them and continue to request forbearances on them.”Despite making a six-figure salary in business administration, she is unable to properly save for retirement, save for home, and cares for her disabled husband who is a cancer survivor and regularly requires dialysis. Her own student loans are $862 monthly and the parent plus loans for her son will add another $362 a month when the federal student loan pause ends.“The interest and penalties are just crazy. My student loan balance increases each month. Black and Brown people can’t get ahead,” added Dunker Brown. “I have no generational wealth, retirement savings or savings for an emergency, yet I have an MBA that I earned in 1996. Having a fancy degree wasn’t the answer it was supposed to be.”Black college graduates owe an average of $7,400 more in student loans than white college graduates, and that gap more than triples to nearly $25,000 after four years from graduation.Sabrina Elliott of Charlotte, North Carolina, couldn’t afford to make payments toward her student loans for the first eight years after graduating law school. By the time she could afford to start making payments, with the debt ballooned from over $72,000 to more than $166,000.For the past seven years, Elliott has made monthly minimum payments of nearly $1,400 a month, but still owes more than the original loans despite paying over $90,000 toward the debt in that time.“Student loans should not impair a person from being a homeowner, starting a family or a badge of shame,” said Elliott. “I have made payment for over seven years and the balance is the same. As you can see, I have repaid the original loan. The minimum payment is a mortgage payment but not high enough to reduce the debt.”Kaida Flowers, a family and child therapist in Philadelphia, Pennsylvania, has struggled to try to pay her student loans from her undergraduate and master’s degree, and only makes around $50,000 a year working a job she pursued to try to help people and emphasized student debt is causing her and others who pursued similar career paths to struggle to get by.She has struggled to try to pay her student loans from her undergraduate and master’s degree, and only makes around $50,000 a year working a job she pursued to try to help people and emphasized student debt is causing her and others who pursued similar career paths to struggle to get by.When the payments resume, she will be forced to pay $300 a month again toward her student debt, most of which goes toward interest.“They’re killing the middle class,” added Flowers. “Part of the American dream is you go to school, you try to do something to have a better life, but it’s just not what it is.”TopicsBiden administrationUS student financeUS student debtJoe BidenUS politicsfeaturesReuse this content More

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      Marco Rubio wants to pause student debt – but only to terrorism survivors

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      Americans who survive a terrorist attack should get an automatic one-year deferment on their federal student loan payments, according to a bill introduced by Marco Rubio, a Republican senator from Florida.“We should do everything in our power to help those who survive a terrorist attack to get their life back on track,” Rubio said in a statement. “Giving survivors some time to regroup by delaying their student loan payments is just commonsense.”The Terrorism Survivors Student Loan Deferment Act would “provide a one-year pause for victims”, allowing them time to “get back on their feet”, or to apply for additional loan deferments, according to Rubio’s office.Rubio first introduced the legislation in 2016, and said the bill was inspired by his office’s work to help a survivor of Florida’s Pulse Nightclub shooting secure a temporary delay on his student loan payments.The attack on a gay bar in Orlando five years ago left 49 people dead and more than 50 injured.While the Pulse survivor’s injuries were serious and life-changing enough that he had considered asking for complete forgiveness of his student loans, Rubio said at the time, the young man changed his mind, and decided to only ask for a delay in his payments, a choice Rubio called “a testament to his resilience and determination”.Rubio’s office did not immediately respond to a request for comment on how “terrorist attack” is defined in the legislation, and which mass shootings or other violent attacks would count as “terrorist attacks”.Some of the reactions to Rubio’s bill were strongly negative, with commenters suggesting the policy proposal was an insulting response to America’s sweeping student loan crisis.Congratulations to Marco Rubio for literally doing the least that he could possibly do to address the student loan crisis. https://t.co/c0SqWuY0sD— Ian Millhiser (@imillhiser) June 10, 2021
      More than 40 million Americans have federal student loan debt. They owe an average of $39,406 each, according to EducationData.org.In recent years, the number of victims killed annually in US domestic terrorism attacks has ranged from 22 to 66 people, according to data assembled by the Center for Strategic and International Studies.“This is nice, but if Senator Rubio were actually seriously interested in safety and giving relief to survivors, he would back commonsense gun legislation like HR 8,” Christopher Zoeller, 19, the Florida state director for March For Our Lives, a youth gun violence prevention group, said in a statement to the Guardian.“He didn’t do it after Pulse, he didn’t do it after Parkland, and he still hasn’t done it today. We can see right through this gimmick.” More

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      Biden is already backtracking on his promises to provide student debt relief | Astra Taylor

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      At his recent town hall, Joe Biden made a series of convoluted and condescending comments about American student debt. His remarks cast doubt on his ability, or willingness, to confront this country’s ballooning student loan crisis. Within hours, #cancelstudentdebt was trending on Twitter.Biden’s rambling justification of the status quo was peppered with straw men, invocations of false scarcity and non-solutions. He pitted working-class Americans against each other, implying that people who attend private schools aren’t worthy of relief, as though poor students don’t also attend such schools. He said that money would be better spent on early childhood education instead of debt cancellation, as if educators aren’t themselves drowning in student debt, and as if we can’t address both concerns at once. He suggested relying on parents or selling a home at a profit to settle your debt, a luxury those without intergenerational wealth or property cannot afford. And he touted various programs, including Public Service Loan Forgiveness (PSLF), that have totally failed borrowers: over 95% of PSLF applicants have been denied.In contrast to Biden’s smug comments, Congresswoman Ayanna Pressley recently revealed that she defaulted on her student loans. Similarly, at a recent Debt Collective event, congressional hopeful Nina Turner said that she and her son owe a combined $100,000. Former Georgia gubernatorial candidate Stacey Abrams has, of course, proudly confessed to being in debt, and Alexandria Ocasio-Cortez has said that becoming a congressperson was easier than paying off her debt. Philadelphia councilmember Kendra Brooks (who is planning to introduce a city resolution calling on the Biden administration to cancel all student debt) has also spoken out about her own struggles as a borrower. Their experience and candor – and commitment to real solutions including cancellation – demonstrate why we need debtors, not millionaires, in our public offices.Let’s be clear about another thing. Biden absolutely has the legal authority to use executive power to cancel all federal student debt. Congress granted this authority decades ago as part of the Higher Education Act. It’s even been put to the test: in response to the Covid pandemic, Donald Trump and his former education secretary, Betsy DeVos, used that authority three times to suspend payments and student loan interest.As he rambled on, Biden gave the distinct impression that he preferred not to have the power to do so. That way he could blame Congress should his campaign promises go unkept. (The day after the town hall, Biden’s press secretary, Jen Psaki, attempted to clarify her boss’s remarks about whether he will use executive authority to cancel student debt. She stated that the administration was still considering the possibility.)Adding to the confusion, Biden seemed unable to keep his own campaign pledges straight, muddling his student debt cancellation proposals. For the record, he campaigned on two distinct planks. One: “immediate” cancellation of $10,000 for every borrower as a form of Covid relief. Two: the cancellation of all undergraduate student loans for debt-holders who attended public universities and HBCUs and who earn up to $125,000 a year. Keeping these two promises is the absolute minimum the Biden administration needs to do to keep the public’s trust.But the Biden administration should, and can, do much more. Biden should cancel all student debt using executive authority. It is the simplest way the new administration can help tens of millions of people who are being crushed by the double whammy of unpayable loans and an economy-destroying pandemic.Yet, to date, all the Biden administration has done for this country’s 45 million student debtors is extend Trump and DeVos’s federal student loan payment suspension. Continuing a flawed Republican policy is hardly a progressive victory – especially not for the 8 million FFEL borrowers who are unconscionably left out of the moratorium.Biden owes this country debt relief not only because he campaigned on it, but because he helped cause the problem. A former senator from Delaware, the credit card capital of the world, he spent decades carrying water for financial interests and expanding access to student loans while limiting borrower protections.Biden’s brand is empath-in-chief, but on student debt he is alarmingly out of touchBiden’s record shows that he won’t address the problem without being pushed. Indeed, the fact that the president has embraced debt cancellation at all (however inadequate his proposals) is testament to ongoing grassroots efforts. The Debt Collective, a group I organize with, has been pushing for student debt abolition and free public college for nearly a decade. On 21 January, we launched the Biden Jubilee 100 – 100 borrowers on debt strike demanding full cancellation within the administration’s first hundred days. A growing list of senators and congresspeople have signed on to resolutions calling on Biden to cancel $50,000 a borrower using executive authority. (It’s worth noting that the $50,000 figure is based on outdated research. After three years of rapidly rising debt loads, the scholars behind it now recommend $75,000 of cancellation.) A growing chorus of voices from across the country and a range of backgrounds are shouting in unison: cancel student debt.Biden’s brand is empath-in-chief, but on student debt he is alarmingly out of touch. The president has shared that his own children borrowed for college and noted that he was the “poorest man in Congress” – meaning the poorest man in a body of millionaires. He didn’t question the ease with which his well-connected kids got well-compensated jobs enabling them to repay their loans, nor mention that people his age were able to go to college without being burdened by a mountain of debt. All people want today is the same opportunity that Biden and his peers had.Instead of acknowledging this generational disparity, Biden reiterated a common criticism of more generous forms of student debt cancellation – that it would help the privileged, specifically the minuscule subset of debt-holders who attended the Ivy League. But as Ocasio-Cortez tweeted in response: “Very wealthy people already have a student loan forgiveness program. It’s called their parents.” As things stand, poor and working people typically pay more for the same degrees than their affluent counterparts due to years or decades of monthly payments and accumulating interest. Our debt-financed higher education system is a tax on poor people who dare pursue a better life.Imagine if, instead of defending the status quo, Biden used his platform to articulate the social benefits of cancelling student debt. He could have said that cancelling student debt will support 45 million Americans and provide an estimated trillion-dollar economic boost over the next decade and create millions of desperately needed jobs. He could have spoken about canceling student debt as a way to help close the racial wealth gap, acknowledging that Black borrowers are the most burdened, or talked about how education should be free and accessible to all if we want to expand opportunity and deepen democracy. He could have acknowledged that cancellation will help struggling seniors, especially those having their social security checks garnished because of student loan defaults. He could have mentioned that debt cancellation is popular, even among many Republicans, and that eliminating it will help his party stay in power.He didn’t say any of that, and so we have to say it. Debtors have to get organized, connecting online and protesting in the streets. We live in a period of intersecting crises. Some of them are very difficult to solve. But cancelling student debt is easy. By refusing to act, the president and his administration are choosing to perpetuate a system that causes profound, pointless, and preventable harm.Astra Taylor is the author of Democracy May Not Exist, but We’ll Miss It When It’s Gone, and an organizer with the Debt Collective More