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U.S. NEWS Wednesday 11 January 2023
Feds propose 'student loan safety net' alongside forgiveness

By COLLIN BINKLEY to forgiveness and a prom- failed to deliver.
AP Education Writer ise that unpaid interest will The Institute for College Ac-
WASHINGTON (AP) — The not be added to a borrow- cess and Success, a non-
White House is moving for- er's loan balance. profit organization that pro-
ward with a proposal that The federal government motes college affordability,
would lower student debt now offers four types of praised the proposal as a
payments for millions of income-driven plans, but significant improvement
Americans now and in the the proposal would mostly over existing plans.
future, offering a new route phase out three of them "The changes proposed to-
to repay federal loans un- while focusing on one sim- day would provide mean-
der far more generous plified option, scaling back ingful financial relief to mil-
terms. the confusing array of op- lions of borrowers and help
President Joe Biden an- tions borrowers now face. shield students from debt
nounced the repayment Under existing plans, that has not paid off, in-
plan in August, but it was monthly payments are cluding those who start col-
overshadowed by his capped at 10% of a bor- lege but do not complete President Joe Biden speaks about student loan debt forgiveness
sweeping plan to slash or rower's discretionary in- a degree," said Sameer in the Roosevelt Room of the White House, on Aug. 24, 2022, in
eliminate student debt for come, and those earning Gadkaree, the group's Washington.
40 million Americans. De- less than $20,400 a year president. Associated Press
spite the low profile of the aren't required to make Opponents on the right
payment plan, however, payments. The new pro- blast the revamped plan the decade, and some cation and the Workforce,
some education experts posal would cap payments as an unfair handout with a critics have put it closer to said the proposal turns the
see it as a more power- for undergraduate loans at steep price tag. The Biden $200 billion. federal loan program into
ful tool to make college 5% of borrowers' discretion- administration estimates Republican Rep. Virginia "an untargeted grant with
affordable, especially for ary pay, cutting their bills in the repayment plan would Foxx, chairwoman of the complete disregard for the
those with lower incomes. half, and require payments cost nearly $138 billion over House Committee on Edu- taxpayers that fund it."q
Education Department offi- only for those who earn
cials on Tuesday called the more than about $30,000 a
new plan a "student loan year.
safety net" that will prevent As long as borrowers make
borrowers from getting their monthly payments,
overloaded with debt. any unpaid interest would
"Student debt has become not be charged. The
a dream killer," Education change is meant to pre-
Secretary Miguel Cardona vent borrowers from hav-
said. "This is a promise to ing unpaid interest added
the American people that, to their loan balance, a
at long last, we will fix a practice that can cause
broken system and make debt to snowball even as
student loans affordable." borrowers make payments.
Biden, a Democrat, is mov- Significantly, the proposal
ing forward with the repay- would also make it easier
ment plan even as his one- to get debt erased after
time debt cancellation making several years of
faces an uncertain fate payments.
before the Supreme Court. Existing plans promise to
The White House has asked cancel any remaining debt
the court to uphold the after 20 or 25 years of pay-
plan and reject two legal ments. The new plan would
challenges from conserva- erase all remaining debt
tive opponents. after 10 years for those who
The Biden administra- took out $12,000 or less in
tion submitted its brief last loans. For every $1,000 bor-
week, with oral arguments rowed beyond that, a year
slated for Feb. 28. would be added.
The Education Department Typical graduates of a four-
formally proposed the new year university would save
repayment plan on Tues- about $2,000 a year com-
day by publishing it in the pared with today's plans,
Federal Register, starting the Biden administration
a public comment period says, while 85% of com-
that often takes months to munity college borrowers
navigate. would be debt-free within
If it's finalized, the proposal 10 years.
would give a major over- Supporters see the pro-
haul to income-driven re- posal as a significant stride
payment plans — one of toward college affordabil-
several payment options ity. Some say it's so gen-
offered by the federal gov- erous that it approaches
ernment. The resulting plan free community college
would have lower monthly — a campaign promise
payments, an easier path that Biden has pushed but