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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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      Biden cancels additional $9bn in student loan debt

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      President Joe Biden has announced that an additional 125,000 people have been approved of student debt relief in a total of $9bn.Biden’s latest approval brings the total approved debt cancellation under his administration to $127bn for nearly 3.6 million Americans, the White House said in a statement.The new approvals include $5.2bn in additional debt relief for 53,000 borrowers under Public Service Loan Forgiveness programs, nearly $2.8bn in new debt relief for nearly 51,000 borrowers through fixes to income-driven repayment, as well as $1.2bn for nearly 22,000 borrowers who have a total or permanent disability.In an address on Wednesday, Biden said that his administration’s efforts to relieve student debt is “not done yet”, adding: “My administration is doing everything we can to deliver student debt relief as many as we can, as fast as we can.”“While a college degree is still the ticket toward a better life, that ticket has become excessively expensive. Americans who are saddled with unsustainable debt in exchange for a college degree has become norm,” he said.Biden went on to criticize the conservative-majority supreme court’s 6-3 decision earlier this year that ruled against his administration’s $430bn student debt forgiveness plan for 40 million borrowers.“Republican-elected officials and special interests stepped up and sued us and the supreme court sided with them, snatching from the hands of millions of Americans thousands of dollars of student debt relief that was about to change their lives,” he said of the decision.The education secretary, Miguel Cardona, hailed Biden’s decision on Wednesday, saying: “The Biden-Harris administration’s laser-like focus on reducing red tape, addressing past administrative failures, and putting borrowers first have now resulted in a historic $127bn in debt relief approved for nearly 3.6 million borrowers.”“Today’s announcement builds on everything our administration has already done to protect students from unaffordable debt, make repayment more affordable, and ensure that investments in higher education pay off for students and working families,” he added.Following the supreme court’s ruling earlier this year, the Biden administration launched Saving on a Valuable Education (Save) plan, which will go into full effect next July and increases the income exception from 150% to 225% of the poverty line.It also intends to reduce payments on undergraduate loans in half and ensure that borrowers “never see their balance grow as long as they keep up with their required payments”, the education department said. 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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      Supreme court’s student loan decision ‘usurps Congress’s authority,’ says Democrat

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      The US supreme court’s decision to strike down Joe Biden’s student debt forgiveness plan late last week “usurped the authority of Congress”, Democratic House representative Ro Khanna said on Sunday.Khanna, of California, argued that if anyone thought Biden was unduly empowered by the legislation which the president used to issue the debt relief program, “then the solution is Congress can repeal the … act”.Chief justice John Roberts and his colleagues on the supreme court “shouldn’t be overturning the will of Congress just because they think Congress gave too much power to the president,” Khanna said on Sunday on ABC’s This Week.The show’s host, Jonathan Karl, pushed back on Khanna’s stance. Karl played a clip in which former US House speaker Nancy Pelosi – Khanna’s fellow California Democrat – asserted that a president could delay debt repayment but not entirely, single-handedly forgive it.In fact, Karl said, the supreme court quoted Pelosi’s words in the decision that doomed the student debt relief program put forth by Biden.Khanna countered by saying that, after Pelosi’s remarks, the Biden administration solicited a legal analysis of the 2003 Higher Education Relief Opportunities for Students (Heroes) Act on which the president based his debt forgiveness program.After that analysis, Biden’s staff concluded that the Heroes Act – which enables the government to provide relief to student borrowers amid a national emergency – gave the president authority to cancel or amend the loans in question, Khanna said.The progressive congressman added that he could understand arguments that the Heroes Act – which was passed about two years after the September 11 terrorist attacks – “was way too broad”. But that argument should be advanced in Congress – “it is not for unelected justices to override” federal lawmakers who were chosen by voters, Khanna said.“That’s what this court is doing,” Khanna continued. “It’s very dangerous. They are basically reinterpreting congressional statute to fit their ideological preconceptions.”Khanna’s remarks came days after he spoke to the Guardian about his wish for an extension to an October deadline to resume payments for 40 million students affected by the debt forgiveness program’s defeat.During that interview, he also said the court’s decision to invalidate Biden’s debt forgiveness program proved the institution was “regressive” and in need of reform. Additionally, he pledged to accelerate efforts to pass a bill which would establish term limits for supreme court justices, who currently enjoy lifetime appointments.Three far-right justices on the supreme court – Neil Gorsuch, Brett Kavanaugh and Amy Coney Barrett – were appointed during Donald Trump’s presidency.Last week, the conservative supermajority which Gorsuch, Kavanaugh and Barrett help form also struck down affirmative action in college admission as well as a Colorado law that compelled entities to afford same-sex couples equal treatment, all about a year after the court eliminated the federal abortion rights established by the landmark Roe v Wade ruling in 1973.skip past newsletter promotionafter newsletter promotionA poll released on Sunday by This Week showed that 52% of Americans believed that supreme court justices ruled “mainly on the basis of their partisan political view rather than on the basis of the law”. That marked a significant increase from January 2022, when only 38% felt that way.However, the poll did show that a majority – 52% – of Americans approved of the decision ending affirmative action in colleges.Khanna said in the short term he would support Biden’s recently announced efforts to implement a new student debt relief plan through the Higher Education Act. That law was unaffected by the supreme court’s ruling involving the Heroes Act.Khanna also called on the president to block student loan interest from accruing beginning in the fall as well.“You have all of these students who have relied on a promise that they are going to have their student loans forgiven,” Khanna said on This Week. “This is a real hardship.”Khanna made clear that past personal experience partly explained his efforts.“I had to take out $150,000 of student loans,” Khanna said. “I’m fortunate now and been able to pay them off.” More

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      US supreme court ‘creeping dangerously towards authoritarianism’, AOC says

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      The conservative supreme court is “creeping dangerously towards authoritarianism”, the Democratic congresswoman Alexandria Ocasio-Cortez said on Sunday, raising again the unlikely scenario of impeaching justices for recent actions.Her comments came just days after the nation’s highest court released a batch of incendiary and far-reaching rulings striking down affirmative action in colleges, LBGTQ+ rights and Joe Biden’s student loan relief program.“These are the types of rulings that signal a dangerous creep towards authoritarianism and centralization of power in the court,” she told CNN’s State of the Union.“In fact, we have members of the court themselves, with justice Elena Kagan, saying that the court is beginning to assume the power of a legislature right now.“They are expanding their role into acting as though they are Congress itself. And that, I believe, is an expansion of power that we really must be focusing on, the danger of this court and the abuse of power.”Referring to ethics scandals that have involved two of the conservative justices, Samuel Alito and Clarence Thomas, Ocasio-Cortez repeated previous calls for Congress to look at removing them, a proposal that would be dead on arrival in the Republican-controlled House.Senate Democrats and independents who caucus with them, meanwhile, hold only a slim majority.Alito is accused of not disclosing gifts from a rightwing billionaire who lobbied for the court to end Biden’s loan relief program. Thomas is also alleged to have taken undeclared gifts, among other alleged transgressions, prompting an ethics watchdog last month to urge him to resign.“We must pass much more binding and stringent ethics guidelines, where we see members of the supreme court potentially breaking the law,” she said.“There also must be impeachment on the table. We have a broad level of tools to deal with misconduct, overreach and abuse of power in the supreme court [that] has not been receiving the adequate oversight necessary in order to preserve their own legitimacy.“And in the process, they themselves have been destroying the legitimacy of the court, which is profoundly dangerous for our entire democracy.”Ocasio-Cortez also called on Biden to expand the court to 13 justices, something the president has said he is unwilling to attempt.Her comments reflect a wave of Democratic outrage at the decisions, which came after Donald Trump’s appointments of justices Neil Gorsuch, Brett Kavanaugh and Amy Coney Barrett gave conservatives a 6-3 majority on the supreme court.Ocasio-Cortez’s fellow progressive Ayanna Pressley, Democratic congresswoman for Massachusetts, was equally scathing on MSNBC’s Katie Phang show, calling the conservative majority “far-right extremists”.“They continue to overturn the will of the majority of the people and to make history for all the wrong reasons, legislating from the bench and being political from the bench,” she said.The panel’s most controversial ruling last year, written by Alito, reversed its 1973 decision on Roe v Wade and ended almost half a century of federal abortion protections in the US.As Biden put it after an address at the White House on Friday: “This is not a normal court.”A poll released Sunday by ABC’s This Week showed that 52% of Americans believed that justices ruled “mainly on the basis of their partisan political view rather than on the basis of the law”, a significant rise from January 2022 when only 38% felt that way.skip past newsletter promotionafter newsletter promotionThe poll, however, did show that a majority, 52%, approved of the decision ending affirmative action in colleges.Condemning the ruling that allowed a Colorado website designer to refuse business from a same-sex couple, transport secretary Pete Buttigieg, who is openly gay, noted the court addressed a situation “that may have never happened in the first place”.“We’re seeing more of these cases, of these circumstances that are designed to get people spun up and [are] designed to chip away at rights,” he told CBS’s Face the Nation on Sunday.“You look at the supreme court taking away a woman’s right to choose, Friday’s decision diminishing … same sex couples’ [quality of life], you look at a number of the decisions, they pose the question, ‘Did we just live to see the high-water mark of freedoms and rights in this country before they were gradually taken away?’“Because up until now, not uniformly, but overall, each generation was able to say they enjoyed greater inclusion, greater equality, and more rights and freedoms than the generation before.”In other interviews on Sunday, two prominent Republican presidential candidates said they supported the supreme court’s recent rulings, with one, former New Jersey governor Chris Christie, accusing Democrats of hypocrisy.“For decades the Democratic party cheered a supreme court that went outside the constitution and made extra-constitutional decisions, in my opinion, because the decisions went in a philosophical direction that they liked,” Christie said on State of the Union.“Now, when the court makes decisions they don’t like, all of a sudden the court is ‘not normal’. This is a results-oriented type of judgment. Instead, what they should look at, is the way they analyze the law.”Former vice-president Mike Pence, speaking on CBS, praised the website ruling. He said: “I’m a Bible believing Christian, I believe marriage is between one man and one woman, and I believe every American is entitled to live, to work, to worship, according to the dictates of their conscience.“The supreme court drew a clear line and said yes to religious liberty.” More

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      The supreme court just threw millions of American student debtors under the bus | Eleni Schirmer

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      Last August, President Biden did something no president has done before. He announced a plan to mass cancel student debt, offering $10,000 to $20,000 of relief for borrowers who earn under $125,000 annually.The triumph of this policy was more than the sliver of debt that it potentially sliced off the second-largest type of household debt in the US. More fundamentally, Biden’s policy proposal put an ideological dent in the American doctrinal belief that a creditor’s right to repayment is the first-order business of any economy.On Friday, in a 6-3 vote on ideological lines, the US supreme court undid all that. The court ruled against Biden’s student-loan forgiveness policy and put millions of Americans’ financial futures in peril.Debt intensifies existing inequalities in society: those who have the least rely on debt the most, for everything from housing to healthcare to higher education. Debtors end up paying higher costs for the same goods than those who can pay cash upfront. Black people and women bear the highest student debt burdens; over time, they pay a higher sticker price for the same degrees as white people and men. For these reasons, Biden’s proposed plan was also a major attempt to chip away at the racial wealth gap.It was no wonder, then, that within weeks of Biden’s policy announcement, half a dozen rightwing lawsuits sued to stop the president’s program. Although most of the suits were thrown out, two stuck, and temporarily halted the program. Late last fall, Biden requested that the US supreme court intervene. Although there has been much handwringing about the student debt case in front of the court – its role as a bargaining chip in debt-ceiling negotiations, its prospects to drive voters to polls in 2024 – most of the discussion misses the point.That’s because the supreme court case in question was not actually about whether the president can cancel debt. It was about whether the plaintiffs in the case – six Republican attorneys general – could reasonably prove that cancelling millions of people’s student debt harms their state, and whether judges would believe their lies.The state of Missouri contended that it will be harmed because a quasi-public loan servicing company there, Mohela, may lose revenue from cancellation, making it more difficult for Mohela to repay an old debt owed to the state of Missouri. But that violates a basic legal principle: you can’t sue on behalf of somebody else. My roommate can’t sue my employer for laying me off and making it harder for me to pay my half of the rent, yet this case would set such a precedent.In fact, internal emails between Mohela employees revealed utter confusion about the case. One employee bluntly pointed out that Missouri has no standing; another worried: “Are we the bad guys?” Even conservative legal experts ideologically opposed to the concept of student debt cancellation acknowledged that the plaintiffs weren’t bringing a legitimate claim.But putting aside the fact that Missouri has no standing to sue, the state’s claim that Mohela’s revenue loss from cancellation would endanger its ability to repay a $105m debt owed from 2008 is patently wrong, as research I recently co-authored reveals. Even with Biden’s pledged cancellation, Mohela is poised to have a gangbuster year, raking in more revenue than at any other point in its history.Yet Trump-appointed judges in the eighth circuit, yielding to dubious conservative claims, issued a nationwide injunction on Biden’s relief policy. Within weeks, the case was whisked to the highest court in the land, skirting over basic fact-finding and discovery processes. In oral arguments, the plaintiffs offered little more than the phrase “it stands to reason” to justify their claim that Mohela would lose money.The plaintiffs rigged up such a convoluted suit in an attempt to avoid a legal reality: the president and the Department of Education have full authority to cancel debt under a provision, the Heroes Act, to cancel debt in national emergencies such as a pandemic. This is just one of many legal authorities that Biden has at his disposal to cancel student loans.Now that the court has struck down Biden’s first policy stab, Biden can, and must, swiftly exercise other legal authorities to automatically cancel debt. The court’s ruling is not the death of debt cancellation – it’s merely a blockade on one channel to get there.But the fact that we have found ourselves in this position – with a couple of frivolous lawsuits delaying relief for millions of struggling Americans – should not be misread as merely yet another failure of our increasingly conservative and out-of-touch court.Debt relief is on the precipice in part because Biden failed in his execution. Despite warnings and pleas from experts and advocates, Biden insisted on routing cancellation through an application, rather than automatically and universally discharging debt. This choice was costly, in more ways than one. It took the Biden administration 52 days between announcing the policy to ready the application program. Rightwing groups seized the opportunity and sued to block the whole program.When Biden takes another crack at his generation-defining policy, he should have a strategy that reflects the ambition of the goal, rather than wavers and offers half measures. The fate of the 2024 elections doesn’t just rest on the bold policies Biden announces, but the boldness of his strategy to actually get them done.
      Eleni Schirmer, a writer and postdoctoral fellow at the Concordia University Social Justice Centre in Montreal, is part of the Debt Collective More

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      ‘There’s no way I can pay it’: Americans dread restart of student loan payments

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      Many Americans are dreading the return of interest accrual and the restarting of their monthly student loan payments as a huge political fight over Joe Biden’s debt forgiveness plan rages on.Americans have $1.635tn in federal student loan debt, held by 43.8 million borrowers. Some 26 million people applied or were automatically accepted for student debt relief under Biden’s plan before applications were suspended because of lawsuits launched by Republicans.That plan would provide student debt relief of up to $20,000 for eligible borrowers and up to $10,000 for borrowers with less than $125,000 in annual individual income.But Republicans pushed to prevent any further extensions of student loan payments and want to overturn Biden’s plan that has now been tied up in the US courts since last year, with a US supreme court ruling on the issue expected very soon.Michael Chaney, a 56-year-old truck driver in Ohio, has student debt from a retraining program through the Ohio Bureau of Vocational Rehabilitation that he went into after getting injured on the job while working in a foundry in the late 1990s.“I had to take out student loans to help pay for the schooling, or else they wouldn’t help me,” said Chaney.He said his student debt increased due to having to repeat some math classes. Even after Chaney filed for bankruptcy in 2009 after getting divorced, his student debt wasn’t able to be discharged. He worked in IT after finishing schooling but switched to truck driving to be able to work more hours.“There’s no way I can pay it. They’ve got it set up so you can never pay it off,” said Chaney, who still owes around $60,000 in student loans. “I keep making $400 or $500 a month payments and none of the principal goes down. I worked all my life and I don’t have nothing. I’ve worked six days a week, 12-hour days in the steel mill before I got hurt. We’re barely staying alive. I can’t keep up. I can’t pay it.”The debt ceiling package negotiated between Biden and the House speaker, Kevin McCarthy, and signed into law in June 2023 ends the pause on federal student loan payments and interest.A spokesperson for the US Department of Education told the Guardian the department will be in contact with borrowers before repayments begin. Interest accrual on student debt is set to begin occurring again in September 2023 and the first payments are due in early October.For millions of Americans, restarting payments or even being able to keep up with payments, won’t be financially possible.“Adding another expense to my budget would put me beyond a financial hardship,” said Anne Marie Mosley, a teacher in Massachusetts who is still waiting to see if her public loan service forgiveness application is approved.“When payments restart, I will not pay. I’m an underpaid teacher and I just won’t have the funds,” said Jacque Abron of Texas.Janelle Gallardo, a mother of three in California, started paying her student loans in 2016 when she completed her master’s degree, with payments ranging from $200 to $500 a month. Under the student loan payment pause, she has struggled to keep up with the rising cost of living and currently works two jobs to make ends meet.“I went from paying about $1,000 a month to now over $2,000 in groceries, I cannot even imagine paying another large bill like this,” said Gallardo. “I don’t even know how we would make it work with resuming payments based on how much everything has gone up in my state. I have not been paying during the pause because all our money either goes to bills or taxes, we haven’t even been able to afford health insurance right now.”But Republicans have also pushed to add retroactive interest to student loans that did not accrue during the pause and revoke forgiven debt for over 250,000 borrowers who applied and were approved for public service loan forgiveness.Christina Winton of Phoenix, Arizona, has struggled with paying her student loans since graduating with her bachelor’s degree and completing her master’s degree program.She has filed for public service loan forgiveness, after having to obtain years of her bank statements because her loan service provider did not have records to prove she made the required 10 years of payments to be eligible.She explained student debt has affected her considerably over the years and despite keeping up with payments, through loan service providers changing rules and ballooning interest, she still owes more than she originally borrowed.skip past newsletter promotionafter newsletter promotion“I’ve been paying student loans for over 30 years. I’m a first generation graduate, first in my family and maybe the last one. I have a 17-year-old and an 11-year-old. Neither of them will be able to attend school, I can’t afford to pay for it, I’m too busy trying to work, pay the bills, and pay these loans,” said Winton.She added: “Once loans restart with interest starting again, the artificially high balance bill will have interest added again, causing a huge crisis.”Debt relief advocates have pushed for broader student loan forgiveness and to expand borrower rights, such as making it easier to discharge student debt through bankruptcies. The NAACP has pushed for a minimum of $50,000 in student loan forgiveness and has warned about the negative impacts starting student loan repayments will have without any forgiveness plan enacted.A recent report by the Jain Family Institute found the student debt pause benefitted borrowers who were already going to pay their student loans back, while structural problems with student debt have created a system where the majority of borrowers have not and cannot pay back their student debt.Jim Mazey, 54, who lives in Ohio, said he had paid over $27,000 on an original student debt of $44,00, but over $18,000 of that went toward interest and he currently had 140 more monthly payments left. He obtained a bachelor’s degree and certification to work as a purchasing manager, where he has worked for 29 years.When the pause ends, he fears being stuck with payments into retirement or the debt delaying his ability to retire.“I will be 65 years of age before the loan is paid,” said Mazey. “Like most people we have, and always will be, living paycheck to paycheck.”Even before the pause on federal student loan payments, the majority of borrowers were not making any payments, with just over 50% of borrowers not making any payments toward direct and FFEL loans in late 2019, according to Department of Education data. More than 4 million borrowers were paying zero payments while enrolled in income driven repayment plans.Audrey Fiscus of Arizona has struggled with student debt since graduating nursing school in 2006 as a single mother, who divorced her ex-husband at the time and went back to school while he struggled with a drug addiction.“I’ve been paying my student loans monthly for over 10 years, ranging from $450 to $510 a month,” she said.Despite making regular payments for ten years, her $35,000 in student debt has ballooned to $82,000 since 2006.“I feel like I’ll die with this debt,” she added. More