Today the total amount of
student loan debt in the U.S.
Stands at $1.6 trillion, more
than from credit cards and car
loans combined.
Following president Biden's
recent sweeping announcement on
student loan forgiveness, many
borrowers could soon see large
portions of their debt burdens
wiped out.
Ali rogin has more on the impact
of president Biden's new policy.
Ali: 43 million people could see
some level of student loan
forgiveness and 8 million people
with their income already on
file with the department of
education could see their
student loans automatically
forgiven.
Here is how some people with
student debt are reacting to the
news.
>> I have about $6,700 left in
federal student loans, so I'm
excited to have that forgiven.
>> I have about $30,000 worth of
interest, so yes, that $10,000
won't cover my interest as it
stands of now.
>> I have student debt over
$200,000.
It's not like I spent it on
clothing, it's not like I went
out and started splurging on
this.
>> I have gotten into plenty of
arguments, especially online,
about useless degrees.
My degree is not useless.
My degree saves lives.
>> My partner's student loan
balance will be completely wiped
out, which is huge because he
graduated from county college a
few years ago.
For myself, it's not just the
loan forgiveness, but it's also
the changes to the income driven
repayment plan, which means now
we are going to save for
retirement.
>> Is an intergenerational
impact for me.
My mom is getting forgiveness,
my brother is having his loan
cut in half.
I will have some forgiveness.
Ali: There is lots of
excitement, also some
skepticism.
Here's what we know about who is
eligible.
Individuals with income under
$125,000, married couples making
less than twice that.
If you received a Pell grant,
you qualify for $20,000 in debt
cancellation.
Other loan recipients qualify
for up to $10,000 in
forgiveness.
But beyond those parameters,
there is a lot we don't know.
To help us with those questions,
I'm joined by Corey turner,
correspondent and senior editor
for NPR's education team.
We just went through the ground
rules of eligibility.
Who are the people that are set
to benefit the most?
Cory: The roughly one third of
the student loan portfolio who
have $10,000 in debt or less.
There are an awful lot of
people.
When you add in folks who are
going to benefit a little more
because they had a Pell grant.
According to the white house,
roughly 20 million borrowers
should qualify to have their
debts completely erased.
Borrowers are going to have to
jump through a couple of hoops
to get this done.
It is not a sure thing.
Ali: That's what I want to draw
you out on, because there's
millions of people that could be
applying for this loan
forgiveness.
Most of them are going to have
two apply online.
They're going to fill out
applications that we haven't
actually seen yet.
And they have to do that on a
website that hasn't actually
gone public yet. So how is that
all going to work? It seems like
it could get messy.
Cory: The education department
says the application should be
up and available early October.
They say it will be simple.
Essentially what the apartment
needs is your income
information.
I have spent the last four years
of my reporting career at NPR
investigating programs like the
teach grant, public service loan
forgiveness, total and permanent
disability discharge, and most
recently, income driven
repayment.
And all four of those programs
were designed with good
intentions that made promises
about loan forgiveness and
ultimately failed many
borrowers.
So I don't want to say I am
cynical, but I think borrowers,
at the very least, need to
approach this process with
patience and a little grace.
Ali: As you know, there's been a
pause on student loan repayments
because of the pandemic.
That's set to expire in January.
We've also heard from the white
house that they're advising
folks to get their applications
done and submitted by
mid-november in order to avoid
having to start making payments
.
That really just doesn't seem
like a lot of time.
Based on your experience with
other programs, are folks going
to be left behind?
Cory: If we assume the white
house is right, that 8 million
people already have income
information on file at the Ed
department, anytime you are
asking 35 million people to fill
out an application to get a
benefit, I think it's inevitable
that some folks are going to be
left behind.
Ali: Is there a way for folks to
check to see if they are among
those 8 million people?
Cory: My understanding is those
8 million people are folks who
were enrolled in income driven
repayment programs because that
program requires that borrowers
submit income information.
What I would recommend, though,
is that borrowers be proactive.
They can go to
edd.gov/subscriptions and sign
up for email updates from the
department, notifying them of
new updates to this program
moving forward.
It's always better to be safe
than sorry. [33.7s]
Geoff: We know another element
of what the Biden administration
is trying to do is propose a new
income based loan repayment
program that essentially lets
borrowers pay a smaller amount
every month than they're
currently allowed to, based on
their income.
Can you tell us more about that
proposal, and how likely is it
to become reality?
Cory: For folks who will still
have debt left over, this could
be a really big deal.
It does a couple things.
It reduces discretionary income
from 10% to 5%, so it will bring
down your monthly payment,
presumably.
Another big deal is it allows
for forgiveness after 10 years
instead of 20 years, if your
loans are below a certain
threshold.
One more really important thing
it does, and I've heard from
lots of borrowers for whom this
has been an issue in the past --
we know that roughly half of
borrowers who were previously in
income driven repayment plans
earned so little income that
they qualified for a zero dollar
monthly payment.
Well, the problem previously is
if you are making a zero dollar
payment, interest is ballooning.
Under this new proposed program,
interest will be covered by the
federal government, so borrowers
in income driven repayment plan
in this plan will no longer see
interest blow up their debts,
even as they're following the
rules of the plan.
Ali: That seems like something
that got overshadowed by the
kind of shiny object that was
the announcement about loan
forgiveness.
Critics say that this the
forgiveness program obviously
doesn't really address the long
term issues related to college
affordability.
What's the Biden
administration's track record on
that so far?
Cory: The critics are right,
because it doesn't.
Affordability is like a coin.
It has two sides.
You have the borrowers who are
trying to afford college and
this plan helps them
considerably.
On the other side is the cost of
college, and this plan does
absolutely nothing to lower the
cost of college or to lower
college's price tags.
I will say that is something
that is much more difficult to
do.
I'm not sure how the president
could possibly do that through
executive authority the way he
has done this.
That is something that is likely
going to require an all-in
effort from congress.
Ali: [00:09:17]cory turner,
correspondent with NPR's
education team, thank you so
much for your time.