Biden Advances “Student Loan Safety Net” Program While Forgiveness Scheme Awaits Fate Before SCOTUS

President Biden is working on a plan to reduce student loan debts. Officials from education call this a “achievement plan”. “student loan safety net,” As his administration waits to the Supreme Court To act on a separate program that will wipe out tens of millions of dollars worth of debt for millions.

The new plan, first announced in summer, was officially published in the Federal Register Tuesday. It lowers monthly payment requirements, and allows for easier loan forgiveness.

“Student debt has become a dream killer,” Miguel Cardona, Education Secretary Statement. “This is a promise to the American people that, at long last, we will fix a broken system and make student loans affordable.”

The proposal will focus on income-driven payment options. Current monthly payments to borrowers are limited at 10% of discretionary income. This would be lowered to 5% under the new plan. The income threshold at which individuals would not have to pay payments would increase from $20,400 to $30,000.

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President Biden makes remarks about student loan debt forgiveness at the Roosevelt Room, White House, Wednesday, August 24, 2022.
(Demetrius Freeman/The Washington Post via Getty Images

People can also get their debts erased with the plan. Current rules allow people to cancel their debts by making payments for up to 20 years. For those who borrowed less than $12,000, the new plan will erase any remaining debt in 10 years. For every $1,000 borrowed, anyone who takes out more will be entitled to an additional year.

Plan also states that interest not paid will not be charged to those who make regular payments.

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The Biden administration The plan, which would run to almost $138 billion over 10 year periods, would save college graduates approximately $2,000 annually over the current system. Administration projects that as many as 85% community college loan recipients won’t have student loans after 10 years.

Critics say the plan is too expensive and that the administration has underestimated its cost. They project it to be around $200 billion. Opponents believe that it is too generous and will lead to tuition increases as more students borrow money on extremely favorable terms.

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Biden hopes that the original student loan handout plan, which would have erased $10,000-$20,000 of debt for millions of Americans, will be preserved. There are ongoing legal issues. The Supreme Court will hear oral arguments on the program at its February 28 hearing.

This report was compiled by the Associated Press.