The Biden administration announced another installment in its student loan forgiveness plan “fix longstanding bugs” in program. Translation: Taxpayers will pay again for the mistakes of Congress and the Obama administration.
Congress created income-based repayment plans in 2007 to help borrowers deal with mountains of debt they can’t pay back. Initially, borrowers could limit monthly payments to 15% of their discretionary income and pay off the balance after 25 years. Those who went to work “Public service” Had to pay 10% for 10 years.
Democrats softened terms when they nationalized the student loan market to pay for ObamaCare, reduced payments for new borrowers to 10% of their income after June 2014, and canceled the debt after 20 years. In the run-up to the 2016 election, the Obama administration extended these plans to older borrowers.
Many of the approximately eight million borrowers who have now signed up for these plans are not paying enough to reduce their balances and have continued to accrue interest. It’s one of the reasons federal student debt has more than doubled since 2010, even though the number of borrowers has increased by only about 25%.
The plans also pose a headache for credit servicers who need to certify income that is subject to change. Instead of signing up for the plans, many borrowers have opted to hold payments for a while, even though it means their loans will ultimately go unapproved. Progressives have criticized servicers for following borrowers’ wishes.
The Department of Education is now riding to the rescue by announcing it will count up to three years of paused payments toward loan forgiveness — in addition to the two-year pandemic pause. The administration takes over “Income” and “Repayment” from income-related repayment.
About 3.6 million borrowers will benefit. Who knows how much it will cost, but an internal analysis by the Trump administration projected the government to spend $435 billion in 2018. That was before the pandemic break.
The government has already forgiven more than $100 billion in student debt through discreet regulatory action and extending the pandemic pause through August. None of this was approved by Congress or met the demands of progressives. White House Press Secretary Jen Psaki hinted last week that the pause will materialize “To be extended again or we make a decision” above “Cancel Student Debt”
Progressives won’t sleep until President Biden pays off all $1.6 trillion in federal student debt. As always, the Saps are the ones who worked to pay off their debts on time.
– Wall Street Journal