President Joe Biden’s push for eliminating hundreds of billions of dollars of student loans, clearly at the expense of all American taxpayers, has been one big tangle, especially as the US Supreme Court ruled it unconstitutional in June – but there might be cases in which student debt relief could be justified.
A USA Today report asserts this is the case with 804,000 Americans whose lingering student debt – a combined total of $39 billion – has been recently forgiven through executive action because they had been enrolled in the so-called income-driven repayment.
It informs that decades ago, the federal government offered borrowers a new option: to make monthly payments that were aligned to their income for a period of 20 or 25 years. Once they reached the 20- or 25-year milestone, their debt would be forgiven.
Yet, the scheme did not work as promised because decades of repayment didn’t result in the zeroing of many borrowers’ balances, as a tiny fraction of the monthly payments went to the principal, with many saying they had paid twice what they owed, and were still left with staggering debt.
Miscalculating The Number of Payments Made By Borrowers
The report points out that the US Education Department is now rectifying a “miscalculation” in the number of payments made by the borrowers in the income-driven program – as identified in March 2022 in a report of the US Government Accountability Office (GAO).
It is noted that for the 804,000 Americans in the income-driven scheme whose debt has now been erased, the situation had been so dramatic that it left them in “tears” and “disbelief.”
One is 47-year-old Katrina Mosler, who had been forced to reside in a rental home in McKinleyville, rural Northern California, near bears invading the property due to her family’s unstable finances.
When she recently logged in to check her student loan servicer website, she saw a smiley face and a “zero” on her balance after the $27,000 she was previously shown as owing had been erased.
Mosler took loans for a physical therapy degree, which she began at the then-Humboldt State University in 1995, but had to drop out after two years.
Her loans were put into forbearance, so she didn’t make payments, but interest kept piling up.
“When you drop out, there’s no guidance. I was 20 and struggling and just pretty aimless,” the woman explained.
She eventually earned a physical therapy degree a decade later and started a career in the field. In the meantime, the income-based repayment she had signed up for helped her but barely “made a dent” in repaying her principal.
Decades of Sacrafice Led To Loan Forgiveness
Mosler is among some of the 804,000 borrowers whose debt had been recalculated by the Education Department and who revealed their “tales of forgiveness in a Reddit thread.
USA Today quotes a student loan expert, Betsy Mayotte, who calls the notifications of erased debt for those borrowers “golden emails” that arrived after “decades of sacrifice.”
According to the report, those stories demonstrate the student loan system’s influence on many individuals and families.
Among those is also 61-year-old Christopher Gaunya, who took $63,000 in student loans in the 1980s and still owed almost $150,000 because of the interest before the recent Department of Education recalculations.
“It feels like I can breathe again,” said Gaunya, an acupuncturist based in Massachusetts, who ended up at a full-time job for the Department of Veteran Affairs.
“I got shaky and welled up and was like, ‘Oh my god, oh my god, oh my god,’” he said, adding he waited for the official email in which “everything says zero, zero, zero.”
The report notes that in his case, as in the cases of many others who signed up for income-driven repayment, the monthly payments barely “grazed the principal,” allowing debts to spike.
“You look at your bill. Your payment is for $113, and $8 of that goes to the principal. The rest goes to interest. It just feels really defeating,” explained Mosler, the California-based physical therapist.
The report stresses that when the Biden administration announced debt relief for the income-driven repayment borrowers in July, Education Secretary Miguel Cardona said the decision would rectify “past administrative failures.”
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress toward forgiveness,” the secretary declared.
Besides the 804,000 individuals in question, the administration also canceled the debts of 1.1 million through defense to repayment, a scheme for students defrauded by their colleges, and another 175,000 who spent over a decade in public service jobs.
The paper emphasizes that while a lawsuit by two “right-leaning” groups, the Cato Institute and Mackinac Center for Public Policy challenged the one-time adjustment for income-driven repayment borrowers over a lack of authority, that was swiftly dismissed by a federal judge.
It is noted that conservative US legislators have called Biden’s student debt relief a “band-aid,” insisting colleges had to be pressured to reduce tuition prices, while many taxpayers view it as a handout at their expense.
Another borrower in the income-driven category, 52-year-old Lisa Frisby, a financier who later became a nurse, protests against that.
“It makes me mad when people are like, ‘I’m a taxpayer. I don’t see why I have to pay for your mistakes.’ I’m telling you, I’ve been paying on that student loan,” she said.
She paid $70,000 on a $40,000 loan, but records on nearly a decade of her payments were lost. Her loan has now been forgiven, and she is even owed a refund.
“I’ll just have my car and my mortgage. I don’t need to be rich. I just want to be at zero,” Frisby declared.
Not Everyone Agrees With the Decisions in Place
Social media users’ comments on the Biden administration’s decision have brought various perspectives, but many seem to be unhappy with the situation overall.
“And the colleges get off without any penalty, despite charging insane tuition prices, which has caused all of this debt,” wrote an X user called The Yootopian in response to a tweet by President Joe Biden’s official profile on the decision.
“Remove socialist policies and return capitalism into the student loan industry,” insisted a user called Dan Morris.
“If you want to throw money at something, try fixing the insolvency that’s going to hit social security,” commented RadioJunctionTx76853, slamming the administration for canceling debts on “worthless degrees like gender studies & art history.”
It appears that public restlessness over the Biden administration’s debt forgiveness schemes would not subside any time soon – even if it boils only down to the cases in which a government income-driven repayment might not have functioned as promised initially.
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This article was produced by TPR Teaching. Featured image: lev radin / Shutterstock.com
Caitriona Maria is an education writer and founder of TPR Teaching, crafting inspiring pieces that promote the importance of developing new skills. For 7 years, she has been committed to providing students with the best learning opportunities possible, both domestically and abroad. Dedicated to unlocking students' potential, Caitriona has taught English in several countries and continues to explore new cultures through her travels.