History is Made when PRESIDENT JOE BIDEN SIGNS THE STUDENT DEBT FORGIVENESS ACT INTO LAW

By Gloria DULAN-Wilson

In America a  college education used to be the ticket to a successful middle-class lifestyle.  But over the past two decades the cost of college has skyrocketed, debt has taken a chokehold on many new college grads and professionals,  and too many borrower are stuck in a quagmire of student loans, and  can’t afford to buy a home, start a business, or save for retirement, take care of their health, etc.  So, while there might not be a Robert Smith to come forth and pay off all their college tuitions, college borrowers can rejoice because President Biden and Vice President Harris' Student Loan Forgiveness Act is  coming pretty close.  

On Wednesday, August 24, when President Joe Biden signed the Student Loan Forgiveness Act, making it the most comprehensive loan forgiveness initiative of its kind, he made history.  In keeping with his campaign promise to provide targeted student debt relief to working and middle class families, some 1.6 million borrowers have already benefited from the program, with approximately 45 million more getting ready to go through the process.  President Biden also announced that Covid student loan deferment, set to end in October, has been extended, and repayments will not begin again until after December 31, 2022.

The Student Loan Forgiveness Act will provide up to $20,000 in debt cancellation to Pell Grant recipients and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers who earn less than $125,000 per year, or households earning less than $250,000, are eligible for debt cancellation.

 

The Act makes the student loan system more manageable for current and future borrowers by cutting monthly payments in half for undergraduate loans; and holding schools accountable when they hike up prices.These actions will help borrowers who need it most – with nearly 90% of relief dollars going to borrowers earning less than $75,000 per year.

Under President Biden’s proposed changes to income-based repayment, the average borrower will save over $1,000 per year on loan payments, and the typical college borrower will see their loan payments cut in half.  More information will be available to borrowers in the coming weeks to find out whether they qualify for debt cancellation and more details on the proposed revamp to the repayment program. And, yes, they will make a real difference for current and future students.

To stay informed, go to http://studentaid.gov to sign up to be notified automatically when this information is available.

To give a better perspective on the impact of this epochmaking Student Loan Forgiveness Act, Lodriguez Murray, Senior Vice President of United Negro College Fun (UNCF).  Murray who was the first in his family  to attend college as well as the first in his family to graduate from high school, attended Morehouse College, an HBCU that is famous for such luminaries as Rev. Dr. Martin Luther King, Jr.; actor Samuel L. Jackson, and so many others, is a genius in his own right, having risen in the ranks of the United Negro College Fund to the level of Senior Vice President in two short years!!! He is living proof of how essential and transformational a quality college education is.  He enthusiastically and graciously took time out of his busy schedule to give an analysis as to why the loan forgiveness will make a major difference in the lives of post graduate students:

LODRIGUEZ MURRAY, SVP UNITED NEGRO COLLEGE FUND (UNCF)

 "This is  a big deal!!   Not just because of the debt being forgiven; it's also a big deal because, this is the first time - and I've been watching Presidents for quite some time - and this is the first time that I can remember a presidential action taking equity into account at this level.  So you have individuals who qualify - earning less than $125K, and a family/couple earning less than $250K  - able to get $10,000 removed from their balance sheet.  But, in addition to that, you find a president and a vice president are applying a balm to misery.  They are giving those who need the most relief the most help.  And that is the most positive thing that I can think about in terms of this announcement."

Mr. Murray's praise and analysis of President Biden's strategy continued, "So you have those who were Pell Grant eligible now able to get $20K - double the level of relief.  And it shows equity; it shows understanding your population; it shows the old American adage that a rising tide lifts all boats has never really been true.  Because when the tides so often in this country have risen, we, as a people, often are on ships that have been grounded.  Now, you're giving an equity lens to this and allowed - tried to give those folks who have never really had an opportunity to float, tried to give them a chance to sail out on the ocean of the American dream.  It really is something to stop and be grateful for."

Having come through college prior to Pell Grants, when the most financial available were National Direct Student Loans, and College work Study (started under President Lyndon Baines Johnson, as part of his GREAT SOCIETY AGENDA), I was curious as to whether or not these  options were still available to today's college student, as opposed to going into heavy debt.  You don't hear too much about it as an opportunity.  Murray, who attended Morehouse, affirmed that he personally was able to take advantage of College Work Study (CWS)  as a means for financing his collegiate expenses:  "Work Study is alive and well.  I do public policy; I do government affairs; I watch these programs; I make sure that Congress knows that they have to fund them on an annual basis.  Work study is one of the programs that grows on a modest level on an annual basis, so I keep an eye on it.  I know it's in existence."

While there is much rejoicing about the Biden/Harris College Loan Forgiveness Program, I am also getting mixed reviews -  good and bad commentaries.  The other side of the jubilation goes something like this:  The $10K reduction is not enough.  They think Biden should start with at least $50K, because there are students - and I know a few of them first hand - who are in debt up to $100K, and haven't even gone to advanced or graduate studies yet.   Daily Kos, a progressive publication, and National Action Network (NAN) state that $20,000 repayment should be the floor, and not the ceiling of the debt repayment program.  Daily Kos is circulating a petition to have the amount expanded.  While all this may be valid, and may become available down the line, it still makes sense to take full advantage of the current opportunity and apply for the Loan Forgiveness program as soon as possible.

Of course, politically speaking, the Republicans don't like it at all - despite the fact that most, if not all of them benefited fro taking advantage of these same programs.  Others had the advantage of being born with the proverbial silver spoon legacy, and never needed any financial assistance beyond their parent's pockets.  Of course, many of our current senators attended college when tuition was less than $2,000 per year and absolutely have no clue how much it costs to successfully complete a four year college program, let alone go for higher degrees.

"There's a very real prospect in our community that here may be an increase in the amount of financial forgiveness.  And it is because of the pervasive financial and systemic concerns that we, as a people, have.  You can talk about college being overpriced - and that is a conversation we can have.  But, the debt load that people are taking on is astronomical!   And the action that the President took was directly aimed at stemming some of that.  Now, when you say "why not more," the finances are coming off the balance sheets of actual individual Americans.  However, they are not coming off the balance sheet of the federal government.  And so the federal government is taking on that burden, so as to clear that burden up - either partially or for some people, completely - to clear that burden up for individuals.  So that would be - you would start to go from billions of debt going on to the federal sheets, to trillions - when you start talking about all debt; or the $50K etc.  But there are tens and tens of millions that are being positively impacted by the decision the way the President did lay it out.  And then he did what we asked him to do, which is look through a lens of equity and consider having those that need relief the most to be the first at the table, and get the largest slice.  And having done that - knowing that he is looking at those who need the most are getting two times the relief of others - that's just not something that we can walk away from; and is something that we absolutely have to support because we know the debt load of our students. I'll give you an example:  The average student at an HBCU is saddled with an annual debt load - or a gap - of over $18K a year.  And that means that if they're Pell Grant eligible, the President's Plan is going to clear up well over one year of  accumulated debt.  That's not something you scoff at." 

I'm absolutely of the mind that every little bit helps - and that you can actually build on it, once you start it; and if you don't start it, you have nothing to work with.  And this student loan debt reduction is certainly something that has been bandied about - and I'm glad to see it finally taking place.  When I was at Lincoln University (PA)  in the 60s President Johnson started a program to relieve student loan debt, whereby those who worked in public or community service positions could actually have their student loan debt reduced by 10% per year up to 10 years.  That seemed to work, and was a great incentive for more people coming out of college to get involved in public service careers (including yours truly).   It appeared to be doing very well - but somewhere around the late 70s/early 80s, it seemed to have disappeared.  A lot of people who had been relying on that, and who had been complying with it all of a sudden found themselves high and dry just like these kids are now.  Those in my age bracket suddenly started having outstanding student loans being deducted from their social security, even though they had completed their ten-year commitment to work in community based non-profit companies. 

"I'm glad you brought that up because part of the announcement that the President made yesterday, he also extended a program called the Public Service Loan Forgiveness.  So this is a program that had existed prior to the Biden/Harris Administration, but it was administered terribly.  So, if you are a teacher - if you work at a non profit - any kind of non profit, you're a police officer, a firefighter - if you are in the public sphere - you're supposed to be able to apply to that program and get part, or all of your loan forgiven.  That program was run so poorly; it was so burdensome; it was so onerous; it was so hard to navigate that hardly anybody on an annual basis was making their way through the program.  Now with the President and Vice President coming into office, they revamped that program, and extended a waiver and allowed more people to get into that program; and to get more actions taken on their loans.  And that has helped a lot of people; in addition to the forgiveness that's going on."

"So now what you have are these multiple avenues to impact this one problem. And that's what it's going to take. Now the challenge is to make the population aware of all of these tools in their toolkit, because they have to meet people where they are.  You know some people are reading newspapers, some are reading the news on the internet; some are getting their news from social media.  We have to figure out a way to reach people where they are and make sure they get the relief for which they are eligible, so that their futures can be brighter; and so that our motto at UNCF: 'A mind is a terrible thing to waste,' really comes to fruition.  We also believe that you should not have to give up your dreams of financial stability for higher education." 

Not only have student loans become so pernicious, but most students don't realize how much they impact their American dream of home ownership -  the loans have become such a pervasive factor in every level of their credit.  Real estate loans are denied since student loans can prevent you from qualifying for a mortgage. 

"Yes indeed.  As students have taken on more of the debt load, that has been more of a problem.  In addition, I mentioned earlier that UNCF is a significant scholarship provider.  And so our encouragement is for every student - every graduate - but for every student when you are choosing a college - to use that same persistence and creativity that you use for every other passion of your life - use that to pursue the grants and the scholarships - because the money is out there.  UNCF has 400 different scholarship programs; and we're not the only provider of scholarships.  And so students must take that same passion, creativity, purpose, determination that they use for everything else and apply it to financing their education.  Debt free - we would be a much better society - we'd be freer of the confines that financially shackle us now."

Mr. Murray's recommendation couldn't be more essential and more timely.   There has been a negative shift in the quality of education in the US, leading to the undermining of  quality education over the last 40+ years.  There's been a step away from quality - brought on by a regime change.   There's also been a step away from actually augmenting and supporting the necessary  basic and quality education that most Americans have a right to expect - from kindergarten through college.  And therefore college has bothe been devalued, and at the same time incredibly more expensive.   When I was struggling to put my three through college - I actually had someone tell me "Well Ms. Wilson you can either choose to put them through school, or choose not to have a place to live!"  I looked at them like they were crazy. I came from a family where a college education was a non negotiable item, and I, like you, left no stone unturned to support them - including moving into a less expensive apartment.  However, it was during a time when Pell Grants, NDSL and other options had been reduced, or practically non-existent.   Thank goodness I'm seeing a return to the concept that education is essential under the Biden/Harris Administration.  However, institutions that used to afford students to get a free education - like City University of New York (CUNY), and Berkley in California no longer provide those options.  Murray however doubts programs like those (tuition free college) will ever be re-established - and may be gone forever. 

Mr. Murray had some words of wisdom to impart for all college students, and those seeking to enhance their education or skills through specialized training:  "I'm not sure that there will be a return to free and open colleges.  That's why the onus is on the student to take their own education in their hands. And I don't just mean the books that you read and how strong you approach your ability to learn; I also mean taking your financial relationship with your educational institute completely in your own hands.  Apply for as many scholarships as possible; going after grants, financing your own education to the best of your ability because that frees you up to make other purchases.  That frees you up to use your finances for other things.  Frees you up for home purchasing.  Frees you up to be able to dabble in real estate.  You are able to actually pursue your own dreams and your own whims when your financial education is in your hands.  And so my encouragement, and is to do your best to take on as few - or maybe even no loans as possible; so that you're not limited by anything except your own imagination. 

Another concern is for students who have become prey to predatory lenders like Sallie MAE, or those that have turned out to be so pernicious that they might just as well hook up with the local corner loan shark. There are others who students thought were going to help them finance their education, only to find out that they are in a swamp of trouble.  Do any of them qualify for any of the loan forgiveness packages that are being offered? 

"Sally MAE, and those kinds of predatory lenders, all qualify under this program.  Additionally,  students who attended for-profit universities, such as DeVry, etc., that have not been worth anything.   And what you find is that this President and Vice President, through the department of education, have discharged the debts of those who went to these defunct predatory for-profit institutions.  And so all of us - all of us in our communities have to be more vigilant.  There are still so many that are like myself, who are first generation college students.  And so you can't blame a student for thinking that all colleges are the same.  But many of the for profits don't provide the same level of quality education as the not for profits.   And so it's up to all of us in the community to make sure that our students are getting access to quality education; and the institutions that we all know, love and we've seen persist prior to the civil war til now - institutions whose names you know - like Morehouse, Spelman, and Xavier (and LINCOLN U, PA), and there may be institutions that are not household names like Texas College, Taledaga, and Tougaloo - but they are standard, strong, persistent non profit colleges and universities that make a difference in the lives of regular citizens and turn the progeny of slave into world changers."

That sounds like a wonderful motivational slogan: "Turning the progeny of slaves into world changers."   Are you going to develop some in-service training programs at the high school junior or senior level, prior to their going into school?  Training them to start looking at the financing well before they actually select whatever school they choose to attend.  It might also be a great opportunity to help parents identify grants and other funding resources, while their children are young, so they will be well prepared by the time they reach college age.  Parents used to set aside funds on an ongoing basis; but college tuition has exponentially increased so much, that it might be well to make it a family team effort.   Students entering their first year of college can also learn to monitor their aid while they're matriculating.   A good in service can educate them to the fact that these are options and opportunities for them. 

"Sure, we believe students should be counseled prior to taking on a debt load, but, in the interim, while that program is being developed, they should sign up at https://studentaid.gov to be notified automatically when this information is available.  Today’s actions build on the steps that the Biden-Harris Administration has already taken to provide over $32 billion in loan relief to 1.6 million borrowers. That includes making temporary changes to the Public Service Loan Forgiveness program so more public service workers can get their debt cancelled after 10 years of service. Individuals can apply right now – until October 31^st - to take advantage of these temporary changes to the PSLF program. Visit PSLF.gov for more information."

Mr. Murray concluded by recommending the following:  In the coming weeks, the Administration will release more information on how to see if you qualify and how to sign up to receive more information about these changes.   Become pro-active about successfully paying off your debts.  Don't take a wait and see attitude.  Learn all you can about your eligibility.  Go to http://studentaid.gov to sign up to be notified automatically when this information is available.

I couldn't agree more - which is why I'm taking the time to post this comprehensive overview about the POTUS' STUDENT LOAN FORGIVENESS ACT - So now it's up to you to share it with your students, your children, your college counselors and financial aid departments.  Don't be on the late show about this.  I'm also including FAQs that might for additional information: 

FAQs regarding the President's College Debt Relief Program:

Why $10K of relief – why not more? And why only for individuals making less than $125K and households making less than $250K?

• Today’s actions advance the President’s vision of growing our economy from the bottom up and the middle out.
• It provides up to $20K in relief to Pell Grant recipients and up to $10K of relief to other borrowers – wiping away the full debt of 20 million people.
• We expect up to 43 million federal student loan borrowers to receive forgiveness, with the most relief reaching borrowers who need it the most.
• Eligible borrowers – those earning less than $125K annually or a household earning less than $250K - are most at risk of financial harm once the payment pause ends.
• That’s why today’s actions are focused on all these borrowers.

How will a borrower know if they qualify for student loan forgiveness?

• Borrowers who earned below $125K annually and households earning less than $250K will qualify for $10K in federal student debt relief.
• Pell Grant recipients under those same income thresholds will qualify for $20K of federal student debt relief.
• 
  

Are current students eligible for relief?

• Yes, current students with loans are eligible for relief. Loans must have been originated prior to July 1, 2022.
• Dependent students who were enrolled in school during the last award year qualify if their parents’ household income was under $250,000.

Isn’t this unfair to all those borrowers who paid down their debt, making sacrifices along the way?

• President Biden believes that a post-high school education should be a ticket to the middle class. But for too many people, the cost of college has skyrocketed and student loans remain a lifelong burden.
• Today’s actions will give more breathing room to America’s working families as they continue to recover from the strains associated with the COVID-19 pandemic by providing targeted debt relief to those who need it most and making the student loan system more manageable in the future.
• The fact that some students in that situation were able to pay off their debt is a testament to them, but it is no reason to deny relief to others.
• And the American people agree – according to a recent survey, more than half of people who paid off their student loans support debt relief for other borrowers.

Won’t this just be a handout to wealthy doctors and lawyers?

• No. No individual earning more than $125,000 will see their debt cancelled.
• Nearly 90% of debt relief will go to individuals making under $75,000 per year
• President Biden is committed to building our economy from the bottom up and the middle out – today’s actions will provide critical breathing room for middle class families as they continue to recover from the impacts of the pandemic. 

What is “Income Driven Repayment” and what are the changes the Administration announced?

• In addition to announcing targeted debt relief for middle class families, the President announced proposed changes to make the student loan system more manageable for current and future borrowers.
• Currently, there are several repayment plans where borrowers can make monthly payments based on their income level, and if they pay for 20 years, the remaining debt is cancelled.
• But there are too many plans and even the most generous plans leave borrowers with too high a payment.
• The Administration is proposing changes that cap the amount that borrowers would pay monthly for undergraduate loans at 5% of their income.
• These changes will be transformative for current and future borrowers. The typical borrower will pay $1,000 a year less. Undergraduate borrowers will see their monthly payments cut in HALF.
• Here’s one example -- under this proposal, a typical nurse with an undergraduate loan making $77K per year, married with two kids, would pay only $61 per month compared to $295 per month under the current income-driven repayment plan.

What does a borrower need to do to receive forgiveness?

• The Department of Education will release more information in the coming weeks about how borrowers can sign up to receive debt relief.
• Some borrowers may be eligible to receive relief automatically because the Department already has access to information about their income during the pandemic.
• But other borrowers may have to fill out a very short form.
• Go to studentaid.gov to sign up to be notified automatically when this information is available.

How many borrowers will this impact?

• We project that up to roughly 43 million federal student loan borrowers (or 95% of all federal student loan borrowers) will be eligible to receive loan forgiveness and, of those, 20 million are eligible to have their debt completely cancelled.
• That’s assuming all those who are eligible for relief take steps to get it. 
• Borrowers in the top 5% of incomes will not be eligible for relief, and nearly 90% of relief dollars will go to those making under $75,000 a year. 

Won’t college just raise tuition now, knowing that taxpayers will end up shouldering the burden for bigger loans?

• The President believes strongly in imposing accountability on college raising costs without delivering additional value to students
• Already, his Administration has taken steps to increase accountability, including:
  • Reinstating an enforcement office at the Education Department
  • Terminating a college accreditor that had previously allowed colleges that defrauded borrowers, like ITT and Corinthian, to gain accreditation and get access to federal student loans
• Beyond that, the Department announced today they would be creating a list of programs that are the worst performers at delivering value for their costs, so that students can make informed decisions on where to go to school.

How will this impact inflation?

• Because we are restarting payments in addition to providing targeted debt relief at roughly the same time, we believe that any inflationary impacts from debt relief will largely be offset by the deflationary impact of restart.
• With different, less conservative, assumptions, the impact could well be neutral or deflationary.

What about income-driven repayment? Given its generosity, doesn’t that also add significant extra spending to the mix?

• The new IDR plan will likely take longer to implement than forgiveness.
• When implemented, the new plan will save borrowers who sign up money relative to what they would be paying on other income-based repayment plans.
• But because we cannot reliably estimate take-up of IDR at this point, we can’t comment on its impact, one way or the other.

How much will this debt cancellation cost?

• What the President announced is a restart of student loan payments, alongside targeted debt relief. In the short term, the impact of the restart will offset the cost of the targeted debt relief.

• In the long term, the fiscal impact of the debt cancellation will be affected by a number of factors, including how many borrowers will take advantage of this relief and the economic benefits that can occur as a result of the targeted debt cancellation. For example, debt relief can lead to more Americans having opportunities to create small businesses, helping grow our economy.
• Ultimately, we won’t have an estimate of the cost of this until the program is implemented.

 

PS:  Hopefully this information and the previous interview have been helpful

Please feel free to let me know if you have had success in getting some or all of your financial debt cleared up:

Email me at: eclecticallyblacknews@gmail.com

NOW THAT YOU KNOW

WHAT ARE YOU GOING TO DO ABOUT IT?

Stay Blessed &

ECLECTICALLY BLACK 

 

Gloria DULAN-Wilson