Student Loan Relief

Following The Supreme Court striking down Biden's Student Loan forgiveness, Biden released his new student loan plan called SAVE. Biden's new SAVE plan is exactly what this country needs. It doesn't fix everything, but it is a major improvement to how student loans work currently.

While the arguments against Biden's forgiveness were always flawed, there is a fair argument to make that people who are going out of school with 10-20k in debt who are making 100k+ starting salaries shouldn't have their loans forgiven. If you make enough to live comfortably and pay off your loans, you should. This new plan makes sure that people without the means to pay their loans are still able to survive and find a way to get back on their feet, while requiring everyone on their feet to pay for the loans they chose to take out.

Every reasonable person with the best interests of this country in mind WILL support Biden's new plan so long as they understand what it is. I'm sure everyone seeing this is reasonable and wants the best for this country, so I'll try give an overview of the changes. You can read the changes yourself here.

1. For the income based repayment options, currently 150% of the poverty line is taken out to make sure the gov isn't taking money you need for food or shelter. That means you get a little under $22k that the government won't count. Anything above this is referred to as "discretionary". Now, last time I checked, cost of living in most places is around double that.

According to the MIT cost of living index, it takes $47k/year to live as a single adult in NYC. Someone barely surviving in NYC (with no retirement or savings) would be expected to pay $2.5k/year. Is this a massive amount? No... but it's 2.5k less than they need to survive.

The new rule raises the 150% to 225%. So instead of being 2.5k in the black, they're only 1.4k in the black. Good? No. Better? A lot.

2. The way loans work is, if you can't pay the entire monthly payment, they just add whatever wasn't paid to the loan amount. Due to this, if you can't afford the payments, your monthly payments will go UP not down, even if you consistently pay them.

Let's say someone has 70k in loans that will need me to pay $1k/month to keep on top of. Should someone who, despite their best efforts, can only find a job that that pays $35k/year they would be expected to pay 100/month... but the other 900/month not being paid would get added to the principal. After 3 years of the max payments they would owe over $100k. Loans go up, not down. Even if their income goes up at this point, affording to pay off those loans quickly becomes nearly impossible. Biden is changing this so that loan amounts can't go up over time. You're guaranteed to, at worst, have your loan total be the same number over time. You still have to repay it plus intrest, but it no longer makes it impossible to repay if you didn't get a good job straight out of school.

3. Income based payments will now be 5% instead of 10% of your discretionary income. Again, this simply allows more people to be able to afford to live. With the NYC scenario, that person would now only be $700 in the red instead of the 1.4k or the 2.5k.

4. Loans of 12k or under will be forgiven after 10 years of payments. The only people who would qualify for this is borrowers who never were able to increase their incomes above about $50k/year 10 years after they graduate. Then if the loan was higher than 12k, it takes an additional year of payments to get it forgiven (max 25 years).

There is a transaction for everything in life. If people pay to go to college, but they don't get what they were buying (a job) then why shouldn't they get their money back?

There's some other stuff as well such as debt will no longer be double counted if you're married, your income for repayments will also not include your SO's if you don't share finances, and a lot of QOL changes to make sure that even those unaware of what to do with their loans still will benifit from this.

All in all, these changes will result in a clear safety net for low and middle income individuals to take out loans if they need it while still requiring higher income individuals to pay their fair share. If anything, this plan is better without the forgiveness. Nothing changes for low income borrowers, middle income borrowers don't benifit as much, but have a solid safety net and won't have to pay an unreasonable amount, and high income borrowers now get essentially nothing. A far more equitable policy that does save the government a lot of money. There will still be people who get screwed over by their debt and this policy has flaws. But this fixes most of the big flaws in the system. This is an incredible improvement. As much as many of us are still disappointed in not getting the 10-20k forgiven, this still must be recognized for what it is. A critical policy change that will drastically change college funding and affordability for the better.

Now just to tackle the problems with private student loans...