Student loan relief, one program at a time

Improvements to the student loan system in the United States are continuing to promise relief from the overwhelming debt burden experienced by millions of borrowers. Thus far, 360,000 borrowers have saved a total of $24 billion since the Public Service Loan Forgiveness program was overhauled, in large part due to the advocacy of the AFT and other anti-debt organizations. Debt carried by borrowers scammed by for-profit universities is being canceled too. Other changes to a once-Byzantine system have made it easier to navigate and more likely to lead to more affordable outcomes than ever before.

Most recently, the Department of Education announced improvements to income-driven repayment processes, which lower the amount borrowers pay when they are enrolled in an income-based repayment plan. Formerly, undergraduate loan payments were limited to 10 percent of a borrower’s income each month; now borrowers will be required to pay just 5 percent (though graduate loan payments will remain at the 10 percent threshold). And instead of an income threshold of about $20,400 a year to qualify for a $0 monthly payment, the threshold is now $30,500.

The results of these changes are significant:

• Most graduates of four-year public universities would save nearly $2,000 a year through lower monthly payments.
• 85 percent of community college borrowers would be debt-free within 10 years of entering the repayment program.
• On average, lifetime payments would be sliced in half for Black, Hispanic, American Indian and Alaska Native borrowers, who typically carry more student debt.
• Lifetime payments would fall by 40 percent on average.

“This is a big piece of the extreme makeover we need to fix the $1.7 trillion college affordability crisis that plagues America’s families,” says AFT President Randi Weingarten. “Today’s proposal means hundreds of thousands of borrowers, especially the least well-off, won’t have to choose between servicing student loans, paying rent or buying food.”

Many AFT members have already experienced some relief through changes to Public Service Loan Forgiveness, the program that relieves debt after a person has worked in a public service job for 10 years and made 10 years’ worth of payments on their loans. “I am so grateful and happy that this will no longer hang over me,” academic adviser Tiffany Friedman says of the $35,000 she no longer owes. “I nearly cried when I found out this debt would be erased. It was just a huge weight lifted off my shoulders,” says literacy coach Andie Hartz, who saved $37,000 in payments.

Advocates hope the new income-based repayment plans will have similar results. At its center, Weingarten explains, the new policy makes the plans far more manageable, a key aspect since they are required of borrowers who apply for Public Service Loan Forgiveness. It amends the existing Revised Pay As You Earn plan, known as REPAYE, and in addition to offering better benefits, it will streamline the process by phasing out or limiting similar programs such as Pay As You Earn, Income-Contingent Repayment and Income-Based Repayment. “The Biden administration deserves kudos for seizing the initiative to make these reforms real,” says Weingarten.

But there is much more to be done, she continues, including curbing graduate school debt in a world where graduate degrees are required for so many professions—including education and nursing. Weingarten also wants to protect the general student debt relief that the Biden administration set in motion but “far-right special interests have used the courts to stop,” she says. Biden’s policy would relieve $10,000 in student debt for most federal student loan borrower and $20,000 for those who had Pell grants. The U.S. Supreme Court will hold oral arguments on the case against the relief in February; the AFT has submitted an amicus brief in support of Biden’s plan.

“The AFT’s lawsuit against Betsy DeVos helped change PSLF,” says Weingarten, referring to the lawsuit accusing the former education secretary of complicating and delaying relief and allowing loan servicers to continue racking up interest from borrowers whose debt should have been canceled. “We won’t stop fighting until rogue loan servicers are held accountable and every borrower is freed from the shackles of the loan debt that unjustly, unfairly and inexplicably clouds their future.”

For help with your student debt, AFT members can use a free member benefit called Summer, which will guide you toward loan relief that may be available to you; or sign up for a virtual student debt clinic run by AFT staff.

[Virginia Myers]