Biden-Sanders task force offers to forgive some student debt
As the country draws closer to the November elections amid the coronavirus pandemic, Democratic candidate Joe Biden has outlined his plan to deal with the student debt crisis.
Biden’s presidential campaign released a document on Wednesday that heeded policy recommendations proposed by his joint task forces, including supporters of Senator Bernie Sanders.
Then 110 page document – which involved six joint working groups – covers the gamut of issues as diverse as climate change, minimum wage increases and student loan debt.
On student debt, the Biden-Sanders team met in the middle on the idea of debt cancellation. (During his campaign, Sanders proposed to eliminate all student debt).
“About six in ten jobs require at least some training beyond high school, and yet the ever-rising cost of tuition and university fees leaves higher education out of reach or forces students into debt all their life. life, “the document says.
Paid college: The task force’s proposal makes public colleges and universities free to students from families earning less than $ 125,000; doubling the maximum amount of the Pell scholarship for low-income students; and “increase federal support for programs that help first-generation students,” as well as people with disabilities, veterans and under-represented groups who apply for college.
Forgiveness for all in the midst of COVID-19: The plan would “allow up to $ 10,000 in student debt relief per borrower to help families weather this crisis.” It should be noted that Biden does not reflect Sanders’ plan to write off all student debt, but instead write off some of it for public service workers.
Forgiveness for some borrowers: The task force recommends canceling all federal debts related to undergraduate tuition fees for two- and four-year public colleges and universities, as well as those who have graduated from historically black private colleges and universities and institutions serving minorities for borrowers earning up to $ 125,000.
Forgiveness for low-income borrowers: The task force would also help low-income borrowers by capping and / or suspending debt payments: its proposal is to suspend monthly billing and suspend interest for those earning less than $ 25,000. Those who earn more than $ 25,000 would have their payouts capped at a maximum of 5% of their discretionary income. After 20 years, their remaining debt would be “automatically canceled”.
Bankruptcy: The proposal sets out a plan that would rejuvenate the Bureau of Consumer Financial Protection to “take action against exploitative lenders and will work with Congress to enable student debt cancellation in bankruptcy.” The current process is complicated, cumbersome and quite difficult, as lawyer Austin Smith explained in a previous interview with Yahoo Finance.
Cancellation of public service loan: The working group recommends reforming this program, criticized for its shortcomings – including a rejection rate of 99% at one point – make registration “automatic” for those who are eligible, such as teachers, and those who work in government agencies and non-profit organizations.
Pardon PSLF: They also propose to “make the program more generous” by offering a staggered cancellation totaling $ 50,000 for public service workers: forgive up to $ 10,000 in student debt per year for a period of up to $ 50,000. 5 years. (This is similar to a bill that Democratic senators have introduced.)
Sorry for the teachers: Educators in particular will get up to $ 50,000 in student debt relief.
For-profit colleges: Under the proposals, for-profit colleges would face a more restrictive environment: “The Trump administration has let for-profit colleges and universities again attack students with impunity by repealing important protections. He proposes to tighten the requirements on how for-profit colleges “demonstrate their value and effectiveness before they become eligible for federal student loans.” The new education secretary restores the borrower defense and cancels loans held by defrauded students who attended predatory for-profit colleges. It will also protect veterans and the military from getting into bad programs.
Consumer advocates were happy with the recommendations, but pushed for a broader cancellation – especially amid the COVID-19 health crisis.
“The cancellation of student debt is now an integral part of the major presidential platforms and it is a big step towards creating real progress… [but] we need relief for everyone affected by student debt, which includes people with private loans from banks, people who attended private colleges and others who are in debt for education spending like books, housing and food, ”Natalia Abrams, executive director of advocacy group Student Debt Crisis, told Yahoo Finance.
Aarthi Swaminathan is a reporter for Yahoo Finance covering education. If you have an idea for a story or would like to share how you’re dealing with your student loan debt, contact her at [email protected]