Biden administration forgives $39 billion in student debt for more than 800,000 borrowers

It’s a new payment plan, so applies to new student debt as well.

If I’m reading the StudentAid.gov correctly, the SAVE plan has the following:

• Increase in income exemption to 225% of poverty line (~$66k/yr for family of 4, ~$32k for single filer, no dependents)
• Undergraduate Loans now are 5% of AGI above exemption limit
• No interest accrued if you make your monthly payment
• After 10 yrs of payment, if principle loan was $12k or less, loan is forgiven. Payment period increases by 1 yr for every $1k over that amount (e.g. for $20k loan, forgiveness after 18 yrs)

If you read the article, yes.

Debt forgiveness occurs after 10 years in an income-driven repayment plan (down from 20-25 years). Payments in these plans is now capped at 5% of discretionary income (down from 10%). Unspecified improvements to tracking progress towards loan forgiveness (historically this has been done by the company servicing the loan, and they are beyond awful at it, so this might just be not relying on them for this decision anymore).

People get tricked into loans they can't afford. "No, no, see, it's cool, once you graduate, you'll be rolling in it!" Queue 20 years of service industry jobs paying barely subsistance wages (happened to my wife).

Here's the experience with our kid, he graduated debt free 4 years ago.

When he was in high school, we got all these emails and memos about "FAFSA, FAFSA, FAFSA" and we went to the school and did all the seminars and all the forms and everything.

Kid got his first choice school - UC Davis - "Well, we've reviewed your FAFSA information, and counting tuition, scholarships, room and board, you need to take out parental plus loans of $56,000 a year for four years."

Yeah no.

Kid got into his second choice school, Lewis and Clark, we thought "Great! In state school! This should be better..."

"Well, we've reviewed your FAFSA information, and counting tuition, scholarships, room and board, you need to take out parental plus loans of $56,000 a year for four years."

🤔 That's the same oddly specific number the out of state school dropped... if we could afford that, he'd be going to UC Davis.

Want to guess what his 3rd choice school came back with (University of Oregon Honors College)?

"Well, we've reviewed your FAFSA information, and counting tuition, scholarships, room and board, you need to take out parental plus loans of $56,000 a year for four years."

So three schools, 1 out of state, 2 in state, all working from FAFSA all came back with the same oddly specific number. What are the chances of that? OTHER parents would have been sorely tempted to go "Well, I guess that's just what school costs..."

WE bailed on the FAFSA system, enrolled him as a normal student at the University of Oregon. Tuition was about $10,000 a year, he had a scholarship that paid $5,000 a year, I ran the other $5K through my Amazon card for points, paid his rent, and gave him a $300 credit limit card for food and expenses.

4 years later he graduated with a CS degree, no debt and went to work at Intel making 6 figures.

39 billion / 804,000 = $48,507.46 on average.

It's not enough, but it's at least something