2y ago

Biden pushes new student loan repayment plan as bills loom for tens of millions

www.politico.com Biden pushes new income-driven repayment plan as student loan bills loom for tens of millions

The effort to boost enrollment in the income-driven repayment program comes as student loan payments resume for the first time since March 2020.

President Joe Biden on Tuesday launched a promotional blitz for his new program that helps student loan borrowers repay their debt, just weeks before millions of Americans are set to receive a loan bill for the first time since the beginning of the pandemic.

The Biden administration is mobilizing to convince borrowers across the country to sign up for the new income-driven repayment program — dubbed the “SAVE plan” — which caps interest accrual and lowers the monthly payment amount for many borrowers.

“It’s the most affordable student loan plan ever,” Biden said in a video released by the White House on Tuesday, describing the program as a major reform to a student loan system “that hurt borrowers for much too long.”

“If you’re eligible for the SAVE Plan, sign up now so you can lower your monthly payments in advance of payments resuming this fall,” Biden said.

139 comments

Honestly whatever on the whole repayment thing cause I'm poor and fucked no matter what so... Meh.
But seriously can we fucking stop pretending the poverty line is real or even close to where they say it is? When every single benefits package and plan talks about a 200% increase from base poverty line or $20,000 over the base poverty limit for approval it just means poverty is much more common and a lot more expensive than we want to admit but it would freak out hundreds of thousands to realize just how poor they actually are.
Rip off the bandaid of bullshit poverty line adjustments and just be honest that the average American is low class now.
- Yeah, the "temporarily embarrassed millionaires" probably don't want to know how embarrassed they actually are, or how permanent "temporarily" is.

This article doesn’t really say what the SAVE plan does so I’m reposting this here.
…the SAVE plan is coming in July 2024 to replace REPAYE, with some parts rolling out this summer and all the details here.
The department says that under the old plan, borrowers repaid $10,956 for every $10,000 they borrowed. Under the new plan, they would pay back just $6,121.
It’s more technical than direct forgiveness but will change income-based plans in the following ways according to this NPR article:
Starting Summer 2023:
floor for protected income rising from 150% to 225% of poverty line
no interest while payments are being made
Starting Summer 2024:
payments now based on 5% rather than 10% of borrowers’ remaining income
those who borrow $12,000 or less can gain full forgiveness in 10 years rather than 20 (with each additional $1000 adding another year so $13,000=11 years etc.)
It’s a start, hopefully someone sees this and saves some money.
Also want to add that these changes are not subject to Congressional approval. They could be repealed (impossible with a Dem Senate + Presidential veto) or they could be struck down by SCOTUS, but this is all being performed via powers given by the Higher Education Act and are generally on much firmer legal ground than the loan forgiveness plan SCOTUS scuttled.
- Just applied tonight and looks like it should reduce my payment by about 50%.
  
  I'm so happy for you! I'm going to see if we can bring down my wife's grad school loan payments. They may not apply.
  
  Oh man that’s great! This is not the complete loan forgiveness I had hoped for but it’s a start and I hope lots more benefit from this especially the ones who needed it the most.
- No interest while payments are being made is absolutely gigantic. It's really a game changer.
  
  My payments are already rock bottom but it's the lower interest that I'm (heh) interested in.

The plan would decrease my payments by about $20/mo and would increase the total amount I would pay. Doesn't seem like it saves me anything. I'm better off continuing to pay my previous minimum payment and pay the loans off early.
I wish they would eliminate/lower the interest rate.
- It eliminates my wife's payments entirely with no interest accruing. Which is great because we're dirt poor at the moment.
  
  Which, if I understand correctly, is WHY it eliminated them.

the current brand new super great SAVE repayment plan that I have access to literally increases my payment by $100 a month
- Were you able to refuse the new plan and keep your old one? I'd like to check it out to see if my interest rate goes down, but I don't want to get locked into super high payments.
  
  yeah I just backed out of the agreement
- How does that work

Unfortunately, this new plan seems like it'll increase my payments from about $200/mo to over $900/mo. The calculator says the $900/mo plan comes with an offer of $0 in forgiveness (and says so directly). Even if I keep the $200/mo plan and won't be fully paid off until 2046 or something (vs 2027 at $900/mo), it still offers me $0 in forgiveness.
I still have $36k in loans and have been paying them off since 2005. I've already paid more than I've owed, due to interest. I used to be poor, but not really anymore; that kinda happens over 20 years. I suppose I can be happy everyone else, but this doesn't mean squat for folks like me.
- How did you figure this out? I'm trying to figure out if it's worth me applying for it.
  
  I received an email from studentaid.gov inviting me to apply. It points to a calculator---really a screening-level application---on their site I can use to compare before applying.
- That’s weird. In reading the specifics of the plan, I don’t see how the math would work out towards increasing payments. Unless your income changes significantly, there isn’t really a provision that would increase payments here. It’s designed to drive down interest for all
  
  If his income now is more than it was when he set up his first income based repayment plan I think It would go up. I would expect that to be the case for most people because over time salaries go up

My payments went from ~ $350 to $29 a month. This is such a relief.

No one actually thought that the guy who exempted student debt from bankruptcy and is owned by the same billionaires that own Republicans was gonna do what he said?
- Not sure what you’re referring to. His student loan forgiveness was blocked by SCOTUS
  
  Blocked for the method he used, Roberts said specifically it would have NOT been blocked had he not tried to push it through with the HEROs act. And it would have been allowed by the Higher Education Act of 1965 which grants the President the authority to cancel debt.

Saw an article earlier today that over 60% of borrowers are planning to boycott repayment. I still haven't setup an account since my loan got transferred to a new servicer. Seriously considering making them come garnish my wages or something. If enough people do it, the system will almost certainly collapse. I can't imagine all the servicers trying to go through the garnishment process with that many people.
- That... seems like a self destructive plan that will only accomplish ruining your credit score for 7 years
  
  Own a home, have a pretty new car, don't plan on moving anytime soon. Could come up with enough cash to pay for anything I need pretty easily and already have lots of established credit. I'm older and stable.

It's still not thru congress yet, and the part Biden brags about wouldn't even start till next summer...
I'll be surprised if any of it materializes, but that won't stop moderates from bragging about it.
- You can literally apply now. It doesn’t need to go through Congress
  
  You should read an article if you're going to post it...
  Not even getting to the point that people were encouraged to apply for forgiveness and that never happened.
- Oh ok, guess we should give up then and succumb to our corporate overlords
  
  Even better, vote Republican! That will solve your problems! Somehow! Trust me bro!
  totally not a Russian shill
  
  Nope.
  But I feel like pretending something is done before it is after the last couple years....
  Is naive at best.
  We keep getting told that things are fixed, and people stop paying attention, then a year down the line it's still not done.
  Don't start running victory laps at halftime, you'll just tire yourself out.

So much for slashing the debt altogether, eh? An excellent production.
- Tell me you haven’t been paying attention at all without telling me you haven’t been paying attention at all.
  
  Paying attention to what?
  Oh you mean this:
  Biden again rejects $50,000 student loan debt forgiveness plan
  It’s really hard to keep track of all the debts Americans have.

This is (i) welfare for the well-to-do, (ii) great incentive for colleges to keep pushing up their tuition fees, and (iii) fiscal stimulus during a critical juncture in the fight to tame inflation. Let it not be said that the Republican Party has a monopoly on bad policy ideas.
- Ah yes, student loans are all the rage down at the country club. Won't you be a good chap and bring me my balance statement, of which I will light my Cuban with.
  
  People with college degrees, on average, make a million more lifetime dollars than people without. This goes up further with post-graduate education.
  Student loan forgiveness should always irst be targeted at college dropouts. Tiering it based on income is not. AS good but is a close 2nd
- Them too. Fuck those guys.
- I disagree with you, but your position has some sentiments I can understand. So instead of getting angry, downvoting, and throwing a fit, I am just going to respond calmly:
  If you look at the actual details of the plan it’s pretty reasonable.
  Lowered interest rates for everyone who are making their payments.
  Higher threshold for low income earners to get some forgiveness. This counters your “well-to-do” argument.
  
  I think he was referring to the idea of forgiveness, not this plan.
- Explain how you came up with point one. The well to do will not qualify or benefit from this at all. Its based on income and is definitely skewed to benefit well off people at all.
  
  College graduates receive a big wage premium; over a lifetime, average earnings of graduates exceed those of nongraduates by about $1M. Yes, people who just graduated may not be earning high incomes today, but project things out over decades and it's clear this is not the group in need of support.
  In fact, given the magic of compound interest, we would expect a college loan forgiveness programme to greatly increase the net financial position of graduates versus nongraduates, on top of what the graduate earnings premium already achieves. Hence increasing the overall level of wealth inequality in the country.
- Not sure how you decided this seeing as this benefits people at the poverty line and not the wealthy. Sure, anything can encourage schools to push up tuition prices, but there's literally a bill in play right now to cap tuition prices. It's not loan forgiveness, but it's far better than nothing. Also, the financial impact is a pittance. It's not the 50k per borrower floated in 2020. It's not even the 10k the scotus shot down.
- My parents were/are (Mom's still alive) well-to-do. I was lucky in that I didn't have to take out student loans. No one is giving me welfare.
  My wife, on the other hand, could sure use some relief from the student loan debt she incurred because her family is not the privileged one mine is.
  We're fiscally responsible. We pay our bills on time. We have a fixed-rate mortgage. We have two cars, but one is paid off.
  We're in our mid-40s and she still has a ton of student loan debt. That's insanity.
  
  Sounds like you have plenty of money but only pay the minimum payments on her loans, which is a questionable choice at best.
- You’re wrong about (i) and (iii) - seriously who does that? - but as someone whose kids will be starting college in a few years I agree with (ii).
  We need to find a way to get everyone who is capable a college education without needing loans. Apart from my own personal interests, there is a huge amount of brain power wasted by not having education freely available.
  
  You’re wrong about (i) and (iii) - seriously who does that?
  I'm confused. Are you saying this is not welfare for the well to do, and is not a form of stimulus?
- I'm well to do now? This is for me and I consider not eating for 48 hours at a time because the price of food rn is bonkers to be a solid financial decision.

unpopular opinion: if you take out a loan, you should have to repay it in full - alternately, dont buy what you cant afford to.
- As someone who has paid off my own students loans I gotta say I fully disagree. The system we have for paying for college is super predatory and creates incentives for all kinds of shitty, but still legal, behavior by colleges, loan companies, etc. School shouldn't cost so damn much in the first place, it didn't for our parents, it shouldn't have for us, it damn well shouldn't for our kids.
  
  Yeah, and student loan forgiveness doesn't change that at all, except possibly making it even worse by inflating future tuition costs.
- ah, you're looking for an echo chamber then? lol nope. I'm here to rock the boat, pal.
  
  I'm against student loan forgiveness, and I think this is a perfectly fair idea.
  Fuck free government money to those who don't need it. That includes the "small business owners" who scammed the fuck out of PPP loans as well as middle class people who benefited from their degree and can afford to pay it back.
- This is a multi layered problem without an easy solution. At face value, there really isn't anything wrong with your statement, but once you dive into student loans/college education/how public education made everyone believe the only path forward was college - maybe, just maybe something needs to be done.
  Capping interest rates so that people can actually pay their debt down is not a bad thing. The root of the problem still needs to be tackled - college is too expensive and administration departments are too bloated - but when the government guarantees the loans, colleges just raise rates because they know students can get them. Schools are not teaching enough financial literacy to make sure kids understand the opportunity cost of what they are signing up for.
  Saying this as a person lived at home and commuted to undergrad and for my master's degree and paid my loan back.
- Opinion that I don't care about the popularity of: An educated populace improves the economy and college should be free.
  
  there's no real guarantee that higher education will lead to a net gain in the economy though - it might, but it's not a 100% chance.
  k-12 is already free, and a lot of people over the decades have been very productive with just that level of education - daresay they've contributed more to the economy - after all, anyone working is a net economic gain over no one working, regardless of their level of education.
- dont buy what you can’t afford to.
  I think this part is what everyone takes exception to. Especially in gen x, no one warned us that “Maybe college isn’t for you because you won’t want a payment that takes 15% of all of your income each month when you’re also trying to scrounge up enough money to buy a house”.
  The message was more “you’re going to be begging groceries at Piggly Wiggly like your cousin Bert if you don’t get a degree in something”
  Bert now has more in his 401k than I’m even close to. Feels like we’ve been bamboozled.
  
  Not just gen x. Millennial here, and I remember college being pushed on us as an idea in middle school up to high school graduation as a "make or break" thing for our futures. You either go to college or you end up a deadbeat.
  Bamboozled we definitely were.
  
  I suppose then it's a lesson on whom you should trust when you're planning on making life-altering financial decisions. presumably the lesson was learned?
- Let's start with those huge PPP loans then.
  
  PPP loans were provided to businesses so that their employees werent immediately fired wholesale - which is what would have happened to many businesses when the customer base dried up during lockdown/covid. businesses are a net gain to the economy - they provide economic stimulus. allowing businesses to fail would just start a collapse. PPP loans by the government worked to prevent that - rather well, in fact.
  students eventually provide economic stimulus but are a net detriment until they are capable of adding back to the economy & that includes paying off their student loans.
- Schools shouldn’t over charge for classes. My university charged 3k for just two courses that were two days a week. School should be cheaper and jobs should pay more.
  I wasn’t fortunate enough to have a college fund setup for me or be taught how to save at a very young age. I don’t have parents to put me through college since.
  Also why did PPO loans get forgiven? Student loan forgiveness should take priority over that
  
  that's nonsense. higher education has a LOT of administrative overhead. the overwhelming vast majority of teachers/professors/etc expect to make a decent wage. tenure has some impact on that as well, but they sure as hell arent philanthropists - the overall academic experience would be drastically different if educational professionals were not adequately compensated for their work. there are many other factors at play as well but paying the teachers is a big one.
  bottom line - education is expensive & will always remain so. accreditation from cheaper schools is all well and good but for many professions, where you graduated from is just as important as the act of obtaining a degree at all.
  in regards to "jobs paying more" - a basic job is going to pay whatever is the lowest it can get away with. if it's too low, no one will accept that job offering & the position will either remain unfilled or the business will offer a higher remuneration. if you lack marketable skills, you are perfectly able to apply for anything you'd like but the chance of you actually gaining that job is laughably low; however, to gain skills one must accrue them - by either working up the ladder, gaining skill via experience, or investment into higher education (which, should be noted doesnt really provide skills, so much as a skillset or framework that the skills can later be integrated into).
  PPO has to do with health insurance. not sure what you're referring to

139 comments