A Republican-led effort to block one of President Joe Biden’s student loan debt relief programs in court has succeeded just days before it was set to go into effect.
Decisions by U.S. District Judges John Ross in Missouri and Daniel Crabtree in Kansas, both appointees of former President Barack Obama, on Monday sided with GOP state attorneys general in thwarting Biden’s Saving on a Valuable Education (SAVE) plan, according to Reuters.
The SAVE plan, which was set to go into effect on July 1, was initially announced by Biden in 2022 alongside a since-canceled larger plan that would have erased up to $20,000 in student loan debt for tens of millions of borrowers.
It was a stupid plan to begin with:
“Under the SAVE plan, borrowers whose original principal balances were $12,000 or less will receive forgiveness after 120 payments (the equivalent of 10 years in repayment),” the White House explained in a statement in August."
So… if you borrowed $12,000 or less… First, who does that on a student loan?
AND, if you made monthly payments for 10 years…
AND if you still owed money…
It could be forgiven.
This was just a way for them to say they were doing something about student loans, but really do nothing about student loans.
2.5 million people qualified for this plan, one of 5 that were put in place.
The plan was largely targeting dropouts, because they tend to be most trapped by loans. They don’t get any income benefit from a college degree, and tend to have lower paying jobs. If you’re doing income based repayment at minimum wage, it’s possible for your loan principle to grow continuously.
I’m not saying it’s perfect, but it definitely would have helped people.
They claim 2.5 million but I doubt the real numbers would have been that high or, after 10 years of payments, that the outstanding debt would have been anything significant.
This comment displays a privileged, ignorant position
It’s basic math… you have to have borrowed less than 12K and not missed a monthly payment for 10 years.
There’s no way, given those two conditions, that there’s any significant balance left.
Some people can only pay the minimum, and in certain loans that gets you no closer to paying it off.
This type of principle based trap is a very common issue
Income based repayments such as SAVE calculate your payments as a percentage of your disposable income. This means it can be as low as $0 per month if you happen to be unemployed for even a short time. Interest still accrues, but doesn’t capitalize with SAVE. This can result in a “significant” balance.
You are underestimating the amount of people who make very low payments based on their income. My SO can pay off their loan in 5-6 years based on our income, but if they didn’t have a proper job they could make minimum payments and pay off the loan in 25 years. You obviously will pay a lot in interest but people do that if they don’t earn a lot of money or make bad financial decisions.
The federal government tracks all student loans, they know very explicitly how many people qualify.
If you’re making income based payments, and you have low income, the debt grows over time because the payments aren’t even enough to cover interest on the debt.
So I’m not going to go into detail. Instead I’m going to ask you to truly challenge your belief here and look into it personally. Consider the interest rates, average wage, rate of inflation, and total cost for rent and other bills. Factor in food and gas costs appropriately.
I say this as someone who has had multiple sub-$12,000 loans and never taken over 10 years to pay off.
That doesn’t matter though. I do celebrate that you have managed to pay off several loans succinctly without defaulting. Sincerely, well done. However, that in no way relates to what I asked.
It’s up to you, of course. No one here can force you. All I did was challenge you to examine what you are certain you know, that’s all.
I am certain, after paying to put my kid through college, that student loans are more than $12,000.
He graduated from a state school in 2018, his tuition was $10,000 a year, and he had a scholarship that paid $5,000 a year. I paid the other $5,000, laundered through my Amazon card for points. ;) But if we had done a loan, it would have been $20K.
So problem #1 - I’m not buying the stated number about how many people it will help. $12K is NOTHING when it comes to student loans.
Problem #2 is how much of that sub-$12K loan is still out there after 10 years.
In the end, it doesn’t matter since it’s all shut down anyway.
They’re trying whatever they can and a lot of it has gone through. Saying they’ve done nothing is a flat out lie.
This one would have been less impactful than other debt forgiveness that he’s done BECAUSE HE’S ALREADY DONE THOSE.
Fyi: people often take out more than one loan, and leave the lowest interest federal loans for last…
Typical Dem leadership shenanigans: they’ll help their rich owner donors and their corporations with no strings attached and hardly any conditions.
When they do anything that solely or even primarily helps the other 90%, though, they’ll means test and otherwise restrict it to death and pretend that it’s the best they can do because of [current rotating villains] having to sell it to their voters.
Voters who have only ever been given a choice between Republicans and almost-Republicans that the DNC back with much more money than anyone to the left of Reagan.