Lone Candle
Champion of Truth
“The Trump administration has unexpectedly taken down the online application form for several popular student debt repayment plans, baffling borrowers as well as experts who say the decision could create complications for millions of Americans with outstanding loans.”
https://finance.yahoo.com/news/trump-administration-removes-application-for-popular-student-loan-repayment-programs-100008394.html
“In August 2022, Biden announced a blanket forgiveness of up to $20,000 in federal student loans for single borrowers earning less than $125,000 or couples earning less than $250,000. This plan—estimated to cost over $500 billion—was swiftly blocked in federal court, and the Supreme Court later struck it down as an unconstitutional exercise of the spending power.
While Biden couldn’t quite bring home the grand prize, he managed to cancel billions in student loans through now-blocked changes to the federal student loan program. Unsurprisingly, these changes also led to a big increase in the estimated 2024 federal deficit—a $145 billion hike.
The seminal achievement of Biden’s student loan overhaul was the introduction of the Saving on a Valuable Education (SAVE) plan, an income-driven repayment plan that dramatically reduces most borrowers’ monthly payments. Under the previous version of the program, borrowers were directed to pay 10 percent of their discretionary income (calculated as earnings above 150 percent of the federal poverty rate) for 20 years before receiving forgiveness. Borrowers will now pay just 5 percent of their discretionary income (now estimated as earnings more than 225 percent of the federal poverty level), with some receiving forgiveness after only 10 years. While the program was estimated to cost taxpayers nearly $500 billion over the next decade, federal courts fully blocked the program by July 2024.
If somehow allowed to go forward, the SAVE plan would be likely to incentivize students to take on much larger student loan balances, because the program requires borrowers to pay so little back before forgiveness. Ultimately, it’s difficult to see how this extra spending doesn’t encourage colleges to hike tuition.”
https://reason.com/2024/12/14/student-debt-disaster/
“Despite failing to enact blanket student loan forgiveness, Joe Biden has still managed to forgive more than $130 billion in federal student loans since taking office in 2021—and due to a series of Education Department rule changes, even more loans are set to be forgiven in the coming years.”
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“Under the REPAYE plan, previously the most popular IDR plan, borrowers were required to make regular monthly payments of 10 percent of their discretionary income (calculated as earnings above 150 percent of the federal poverty rate) for 20 years in order to receive forgiveness. But in 2022, Biden announced the Education Department would replace the REPAYE plan.
In its place, the Saving on a Valuable Education (SAVE) plan is a significantly more generous alternative, only requiring monthly payments of 5 percent of borrowers’ discretionary income (now calculated as earnings above 225 percent of the federal poverty rate), with forgiveness after just 10 years for balances less than $12,000. Late or incomplete payments would still count during the required repayment period, unlike under the REPAYE plan.”
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“In all, the new IDR plan is estimated to cost taxpayers nearly as much as Biden’s original attempt at forgiving $475 billion over the next decade (blanket forgiveness was estimated to cost up to $519 billion). While Biden claimed that his recent forgiveness would help swaths of Americans “buy a home start a business even start a family,” it certainly isn’t typical taxpayers—the majority of whom do not have the benefits of a college degree, or the student loans to match—who will end up benefiting.”
https://reason.com/2024/03/07/biden-is-wrong-about-student-debt-forgiveness/
“There are real problems with America’s student loan system. But they mostly involve people who take on debt to pay for expensive graduate degrees.
Those problems are rooted in a little-known 2005 law that eliminated a cap on the amount of federal student loan debt that graduate students were allowed to take on. In the following decade and a half, the amount students borrowed for graduate school climbed.
Students weren’t just borrowing to pay for high-quality graduate programs. Some of the graduate programs that saw students take on the largest debt burdens were those that provided the least value in terms of quality instruction or earnings.
Graduate students, in other words, weren’t just taking on more debt. They were taking on more debt for less lucrative degrees, offered by programs eager to absorb federal loan dollars. Even as undergraduate degrees largely held their value, a bevy of newly subsidized graduate degrees have lured students into expensive programs of dubious quality.”
https://reason.com/2024/02/06/the-real-student-loan-crisis/
“According to an analysis from the Penn Wharton Budget Model, the new plan is expected to cost around $360 billion over the next decade—a staggering price tag, though not quite as much as the over $500 billion predicted cost of one-time student loan forgiveness.”
“the SAVE plan radically reduces monthly payments—and the time required before forgiveness. Under the plan, borrowers only pay 5 percent of discretionary income, which is now defined as earnings above 225 percent of the poverty rate. Borrowers only have to make 10 years of payments before forgiveness, if the balance is less than $12,000. Further, interest will not accrue on borrowers’ loan balances when their monthly payments are not enough to cover interest.”
“With his original plan for writing off billions of dollars in student loans undone by the Supreme Court, President Biden has a more modest workaround in mind. But that scheme, based on adjustments to existing income-driven repayment plans, faces not only renewed legal challenges and a bureaucratic gauntlet on its way to implementation, but estimates that the ultimate price tag will be $475 billion—much higher than originally expected. In other words, be ready for an already spendthrift federal government to burden taxpayers with yet more debt.”
https://www.politico.com/news/2023/07/05/inside-joe-bidens-new-student-loan-repayment-plan-00104723
“Roberts’s attempts to make the Heroes Act mean something other than what it says are at times confusing and difficult to parse. But it basically boils down to this: In order to provide for the particular mix of student loan relief prescribed by the Biden administration’s policy, the secretary had to both “waive” some student loan obligations and “modify” others. That is, the policy only works if the secretary has the power to outright eliminate some obligations, while merely making changes to others.
The chief’s primary attack on the Heroes Act’s statutory language is that he reads the word “modify” too narrowly to permit these changes. As he writes, the word “modify” “carries ‘a connotation of increment or limitation,’ and must be read to mean ‘to change moderately or in minor fashion.’” And then he faults the Biden administration for doing too much, attempting to “transform” student loan obligations instead of merely making “modest adjustments.””
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““In the HEROES Act,” Kagan notes, “the dominant piece of context is that ‘modify’ does not stand alone. It is one part of a couplet: ‘waive or modify.’” The word “waive” moreover means “eliminate,” so Congress explicitly gave the secretary the power to simply wipe away student loan obligations altogether.”
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“Perhaps recognizing that his attempts to parse the text of the Heroes Act may not be entirely persuasive, Roberts’s opinion also offers an alternative reason to strike down Biden’s student loan forgiveness program — something known as the “major questions doctrine.”
Briefly, the major questions doctrine states that the Court expects “Congress to speak clearly if it wishes to assign to an agency decisions of vast ‘economic and political significance.’” And, as Roberts writes, there’s little question that this student loans policy, which could forgive hundreds of billions of dollars in student loans, involves matters of great significance.
But the most important thing to understand about the major questions doctrine is that it is completely made up. It appears nowhere in the Constitution, and nowhere in any statute, and was invented largely by Republican appointees to the Supreme Court. It is true that the Supreme Court has invoked this made-up doctrine several times in the recent past — mostly in opinions joined entirely by Republican-appointed justices who wished to strike down policies pushed by Democratic presidents — but, in relying on this fabricated legal doctrine one more time, Roberts effectively cites past power grabs by the justices to justify a new power grab.
And even if you accept the major questions doctrine as legitimate, it’s not clear why Biden’s student loans program still should not be upheld. The doctrine merely states that Congress must “speak clearly” if it wishes to delegate significant authority to a federal agency. And, for the reasons explained in the previous section, Congress spoke quite clearly when it wrote the Heroes Act.”