The Biden administration is making a desperate plea to the Supreme Court to lift the ban on their supposedly lifesaver program, the Savings on a Valuable Education (SAVE) plan. Designed with flashy promises of alleviating the crush of student loans suffocating millions of borrowers, the SAVE plan was nothing more than another round of hollow Biden promises. These initiatives, like the student loan forgiveness program that was previously shot down by the Supreme Court, are mere illusions of aid. The White House asserted that the SAVE plan could effectively make borrowers’ monthly payments disappear, not to mention slice monthly costs in half and potentially save yearly contributors a grand or more.
Promises of appeasing those with ‘original balances’ of $12,000 or under with the forgiving of remaining balances after a decade of payments was also proposed. But it’s essential to understand that these offerings are wedged between legal challenges by Republican-led states who see through the smoke and mirrors. Indeed, Biden’s SAVE has already been placed on temporary hold until all legal proceedings have concluded. The 8th Circuit Court of Appeals were prudent in issuing a preliminary injunction that blocks this illusionary student loan repayment plan, putting the brakes on the Department of Education’s potential deceit.
In the midst of these roadblocks, Biden’s administration continues to attempt defending the scheme in court while the existing SAVE plan users are bafflingly being shifted into forbearance. Outside of the government’s coddling efforts, private student loan borrowers are excluded from such federal relief. But there may be a literal ‘saving grace’ for them in looking towards a tactic as simple as refinancing to a lower interest rate. In reality, these trickeries aren’t aiding students in need, but instead creating an environment of reliance on unmet governmental promises.
A mere 40% of borrowers are managing to remain current on their student loan payments, as they resumed only recently in October after a three-year hiatus caused by the COVID-19 pandemic. This information is provided by a recent Government Accountability Office report. Subsequently, this report stated that by the end of January 2024, roughly a quarter of borrowers in repayment were enrolled in the scheme we call the SAVE repayment plan. An unfortunate consequence of the court’s injunction means these borrowers, caught in the midst of litigation, do not need to make payments on their loans. Whether this is truly liberation or only another complicated corner of the student loan maze is yet to be seen.
The litigation does, however, prevent the accrual of interest on their loans during this doubtful grace period known as forbearance. The cost is that time spent not paying loans does not count towards the Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment (IDR) promises. The PSLF lure tricks borrowers into believing their federal student loans will disappear after a decade of qualifying payments if they work full-time in a qualifying government position or are tied to a nonprofit organization. The IDR consolation prize includes loan forgiveness after a 20 or 25-year repayment term depending on the promised plan.
The Biden administration’s Education Secretary, Mr. Cardona, has argued that this injunction harms borrowers who have made repayments for nearly a quarter of a century by rejecting the promise of loan forgiveness that has been a shiny promise for the last three decades. These claims, though well-dressed and seemingly well-suited, overlook the fact that the private student loan user would not leverage any benefits from this asserted federal relief. Yet, the struggling borrowers could potentially find salvation from their financial burdens by refinancing the dreaded loans to a lower interest rate, which could, in effect, reduce the monstrous weight of their monthly payments.
The American public’s faith in these governmental promises is less than staggering. A recent AP-NORC Center for Public Affairs poll revealed that less than four out of ten Americans believe in the fantasy of the federal student debt cancellation. In fact, Americans were more likely to put their support behind conditional loan forgiveness in specific dire situations. Instances such as deceit or wrongful beguiling by the school, or cases where the borrower has remained steadfast and punctual with loan payments for two decades, or when the loans accrued more interest than originally borrowed could make the case for loan forgiveness.
Some may argue that debt cancellation is appropriate if the borrowers, laden with excessive debt related to their meager income, were duped into attending a school that left them with nothing but ravaging debt. Or better still, if the borrowers are going through financial hardship. But these are hardly the situations that the ever-generous Biden administration has chosen to focus its efforts on. Instead, they focus on those who took on loans voluntarily, assuming the benefits would outweigh the costs, only to find themselves encouraged to rely on unreliable promises of government forgiveness.
The number of borrowers reportedly defrauded by their schools has significantly grown in recent years, reaching over a million. These overburdened borrowers received a debt relief from the government, a move supported by a majority of Americans. The University of Chicago Harris School of Public Policy’s Associate Professor Lesley Turner asserted that a shift in focus is crucial for the most vulnerable borrowers.
However, reliance on unpredictable forgiveness policies only serves to obscure the contentious issue: the federal student loan conundrum at large. The focus must shift away from unachievable, broad-based student loan forgiveness programs towards more effective policies that can genuinely serve and support those vulnerable borrowers who are burdened with debt, but did not necessarily benefit from their investment in the ways they had hoped.
Rather than magnify the illusions of massive student loan forgiveness plans which fade under scrutiny like the one the Supreme Court saw through in 2023, a shift in strategies is required. Removing the oppressive chains of debt and restoring honesty to the student loan dialogue is an urgent necessity.
In light of these facts, it becomes increasingly clear that the Biden administration’s policies, while wrapped in shiny populist rhetoric, are impractical and unattainable. For the millions of struggling borrowers bound by the shackles of student loan debt, these lofty promises add more stress than relief.
Thus, instead of riding the merry-go-round of unachievable loan forgiveness schemes, it’s time for more sensible and efficacious approaches. Real-world solutions that are achievable and sustainable, like encouraging private loan borrowers to refinance towards lower interests rates, can provide authentic relief.
Moreover, highlighting the importance of sound financial management and repayment strategies, as opposed to relying on quasi-reprieve federal loan programs, can effectively equip borrowers to manage their loans. This shift in approach could well usher in the actual relief millions of student loan borrowers seek.
Loan forgiveness programs, ideally utilized, are not inherently wrong, nor should they be indiscriminately shunned. Yet the perception of these programs as easy escapes from essential responsibility fosters a damaging dependency on federal relief. Instead, they should be used as safety nets for those truly in need – those defrauded, misled, or unfairly burdened.
Enveloped in the illusionary charm of Biden and Harris, it’s time to shatter these deceptive shadows that promise relief but deliver far less than promised. Genuine solutions require the combined efforts of borrowers, educational institutions, and the government. Together, they must focus on equipping individuals with realistic strategies to deal with financial challenges, promoting responsible borrowing and lending, and advocating for clear-cut and fair loan forgiveness policies.