Student Loan Debate Continues: The Most Up-to-Date News You Need to Know

• Author: Kelly Cooke
• Posted: 2024-05-23

All around the world, people have been hit hard financially by concurrent global events that have adversely impacted nearly every aspect of life, especially employment and wages and product and service prices.

While many Americans struggle with growing financial difficulties and paying for basic necessities, student loan servicers have ramped up their efforts to procure payments from Federal Family Education Loan (FFEL) and private borrowers who couldn't take advantage of President Joe Biden's federal repayment pause.

Whether you're enjoying the pause or desperately seeking solutions, you can find the most recent news about this important topic below:

Public Service Forgiveness Still Available

The U.S. Department of Education (DOE) announced on Wednesday, May 4, 2022, that it has approved forgiveness of approximately $6.8 billion for 113,000 borrowers who applied for student debt relief via the Public Service Loan Forgiveness Program.

On average, the forgiveness equals approximately $60,000 per borrower.

According to experts, the number of borrowers who received assistance represented only a tiny percent (0.26%) of the 43.4 million borrowers struggling with their loans.

Yet, the aid is still a relief to the government and non-profit workers who qualified because they previously made 120 payments or served in a public service positions for 10 years or more.

The DOE made the announcement to remind those in public service positions that they can still apply for this aid. As a result of new rules set to expire October 31, 2022, FFEL and Federal Perkins Loan borrowers, who normally can't apply for public service forgiveness, can apply as well. They merely need to consolidate their loans into Federal Direct loan status through a process that takes a maximum of 45 days after application.

According to the Consumer Financial Protection Bureau, approximately one-quarter of the American workforce might qualify for student loan public service forgiveness. They merely need to contact the DOE via methods outlined on the StudentAid.gov website.

White House Signals Potential Income Limit

White House Press Secretary Jen Psaki stated on Tuesday, May 3, that President Biden is sincerely considering forgiving $10,000 for all student loan borrowers.

One possible qualification for a "means test," which she noted as an example during a press briefing in Alabama, would be that the borrower couldn't make more than $125,000 a year.

Many experts initially thought that the President would make the income limit $80,000, but he and other officials are taking into account inflation, education costs and other factors.

That said, officials haven't yet indicated the exact limit or any other potential requirements. President Biden is still expected to make a decision about widescale forgiveness within a few more weeks.

Broad Lack of Consensus Shows Deep Divide

Some people fear that any addition to the federal debt by paying off even $10,000 per borrower nationwide won't result economically in positive outcomes and could make inflation worse.

Outside of the millions who still owe money on their student loans, two distinct groups have stepped forward to protest any type of forgiveness: Members of the first group took out loans and repaid them. Members of the second group never received a college education.

Both groups feel like they shouldn't have to pay off the debt of others through their taxes.

Many of them don't acknowledge the societal and economic factors that have forced certain people to get student loans to make better lives for themselves, especially the disabled, people of color and women.

They also don't acknowledge the broken system that doesn't take into account serious life events that can impact repayment or that current repayment solutions haven't kept up with the times.

Many people in these two groups acknowledge that student loan forgiveness seems inevitable, especially in light of growing evidence of fraudulent activities by many student loan servicers and some for-profit schools, and support an income cap and means test so that only borrowers who truly need aid receive it.

Additionally, they only support undergraduate loan forgiveness. They recognize that a 4-year degree has become a necessity in some parts of the country for survival, but feel strongly that graduate degrees result in high-paying jobs that make student loan repayment easier.

Things to Keep in Mind

As many experts have noted, no perfect student loan solution exists.

All sides of the debate agree that forgiveness doesn't fix the larger problems with the system that include prejudices, fraud and growing higher education costs.

It also doesn't address the many processing problems that exist with current repayment assistance programs. Some self-employed borrowers, for example, lose a lot of time and money trying to apply for help because their servicer rejects their applications based on the nothing more than the specific words they used in their requests.

People with disabilities that significantly impact their income can only receive forgiveness if they're deemed totally and permanently disabled as defined by the Social Security Administration, which ignores borrowers who haven't yet successfully received acknowledgement or who can still work but in a limited, low-paying capacity.

If you're currently struggling to repay your student loan outside of the current repayment pause or worried about what might happen after September 1, speak to a DOE representative by using contact details on StudentAid.gov.

Additionally, it's important to inform the DOE if your servicer forced you to use up your forbearance, continuously harasses you via email, phone or text during the repayment pause or refuses to provide your loan default date, as reports grow daily of borrowers experiencing these types of problems.

This is an ongoing news story.