US Dept. of Education Announces ‘Student Loan Safety Net’

The US Dept. of Education on Tuesday formally proposed a new repayment plan. The Biden admin. characterized the plan as a "student loan safety net" that will lessen the likelihood of borrowers getting overwhelmed by debt.

US Dept. of Education Announces ‘Student Loan Safety Net’
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Facts

  • The US Dept. of Education on Tuesday formally proposed a new repayment plan. The Biden admin. characterized the plan as a "student loan safety net" that will lessen the likelihood of borrowers getting overwhelmed by debt.
  • This proposal includes a change that would raise the threshold for being required to make payments, with single borrowers making less than $30.6K per year being able to put off repayments — an increase from the current threshold of $24K.
  • Also, borrowers would see more of their income protected before they have to make payments, with undergraduate borrowers seeing the percentage of discretionary income they need to pay sliced in half. The Dept. of Education also won’t charge interest not covered by a borrower’s monthly payments.
  • The proposal comes as Biden made reforming the income-driven repayment program a priority when he announced his relief plan for student borrowers in August.
  • While the new repayment plan is moving forward, the future of Biden’s one-time cancellation of student debt is in the hands of the Supreme Court, which is weighing whether to uphold the plan in the face of two legal challenges from conservative groups.

Sources: PBS NewsHour, CNN, Market Watch, and FOX News.

Narratives

  • Republican narrative, as provided by Washington Examiner. With his broader student-loan forgiveness plan having been ruled illegal in the lower courts, coupled with not standing much of a chance before the conservative-majority Supreme Court, Biden is trying another way to let liberal borrowers off the hook at taxpayer expense. Every Biden plan seems intent on bankrupting the country rather than tackling the root problems of tuition costs and the student-loan system.
  • Democratic narrative, as provided by NY Times. Biden is trying to fulfill his promise to make the student-loan system more manageable and unburden those buried in student debt. This is the most consequential move he’s made yet, as this plan will become a permanent fixture to help current and future borrowers — from all walks of life and of all political persuasions — to cut their monthly federal payments by half or more.