Why are Democratic candidates going on about student loan debt? Why, the problem is practically solved already!
That’s the message of a piece in The Upshot (7/24/19)—the New York Times‘ project aimed at “examining politics, policy and everyday life in new ways”—written by Kevin Carey, who directs education policy at the New America foundation. (New America’s higher education program is largely funded by Bill and Melinda Gates.)
According to the New York Times‘ Upshot (7/24/19), Democratic candidates are proposing solutions to a student debt problem that has largely already been solved.
“It’s Easy to Forget, but a Program to Forgive Student Loans Already Exists,” is the headline. The subhead clarifies: “Democrats are campaigning to fix an issue that is already starting to resolve itself for many teachers and other public servants.”
After outlining proposals by Bernie Sanders and Elizabeth Warren for large-scale forgiveness of student loans, Carey writes:
What’s strange about the new crop of proposals is that the Department of Education already has a public service loan forgiveness program, called PSLF, which President George W. Bush signed into law in 2007.
Sure, Carey admits, almost no one who applies for this program has their debts forgiven:
In the 18 months after borrowers with a decade of service in government or nonprofit jobs first became eligible in 2017, 73,554 people applied to have their student loans wiped out. And 73,036 were turned down—a rejection rate of 99.3 percent.
But that’s a problem that’s going to work itself out over time, Carey explains at great length—applicants will figure out over time how to make themselves eligible for this extremely convoluted program. The bottom line, writes Carey:
Nearly half of the $870 billion in outstanding Direct Loans — the kind that are eligible for loan forgiveness — is being repaid through income-driven plans, the kind that are eligible for loan forgiveness. And one in four American workers is in a job eligible for the forgiveness program.
So nearly half of $870 billion in debt is eligible for loan forgiveness, and one in four workers have jobs that qualify them for that program. If you do the math, that’s very roughly $100 billion that could theoretically be forgiven—or about 6 percent of the $1.6 trillion in outstanding student debt.
The upshot, according to Carey: What are these candidates belly-aching about?
Democrats competing to help teachers and other public servants with loans may be about to spend hundreds of billions of dollars to fix a problem that is already on the way to being solved.
Or 6 percent of it, anyway.
You can send a message to the New York Times at letters@nytimes.com (Twitter:@UpshotNYT). Please remember that respectful communication is the most effective. Feel free to leave copies of your messages in the comments thread.
Featured image: New York Times depiction (7/24/19) of Bernie Sanders at a student debt rally with indebted former student . (Photo: J. Scott Applewhite/AP)
Um, not quite. Your mockery of Carey’s article is spot on, but your math is off.
“Nearly half” of $870 billion is available for loan forgiveness. Supposing it is half, that’s $435 billion available.
Repeat: That’s the amount available. You can’t say that because only a quarter of Americans have jobs making them eligible for a share of that relief that therefore only a quarter of that amount will ever be disbursed. It’s the logical equivalent of someone proposing a $1 trillion reparations fund and you saying that because only 13% of Americans are black, that only 13% of that money would be paid out. That’s not “doing the math,” that’s doing – well, I’m not sure what but it’s not math and it’s not correct.
Surely it’s sufficient to note that:
– it’s nonsensical to airily dismiss a 99.3% rejection rate on the grounds that, hey, it’ll work itself out;
– the program is limited to certain kinds of work (with at least 10 years of experience); and
– even by a generous understanding it will address only a touch over a quarter of the outstanding debt;
and given all of that, the idea that this is any sort of “solution” to the debt crisis (except for maybe a limited subset of those affected) is utterly fatuous.
This is a great comment. To add to it, the article compares PSLF to the proposed student loan forgiveness plans by the Democrats, when they are not remotely comparable.
In PSLF, depending on which repayment plan is used, the borrower repays most if not all of the loan by the end of 120 months anyway, with very little to “forgive”.
Not only that, but with PSLF, for the .06% of lucky people that actially qualify, they also have to pay taxes on the forgiven balance. With the proposed forgiveness plans, there would be no tax on what is forgiven.
Agree or disagree with the idea of forgiving student loans, PSLF is not even close to the same thing, and the author either has never read about either subject, or is wilfully misleading readers. I know the media lying is absolutely unheard of, but I suspect that is what this laughable article is doing.
Owing a debt to sophistry
“..rejection rate of 99.3 percent” – – – Oh, that’s not so bad… I thought it might be something futile, like a 99.4% rejection rate! THAT would make a person want to give up…
The income-based reimbursement program theoretically can be forgiven after 25 years of payments after the income-based reimbursement program is started. Since this program wasn’t available for the first ten years after I graduated, I will still be paying on my married consolidated student loans by myself (because my ex husband refuses to pay and there is no way to unconsolidate) even though the income-based plan is based on both of our incomes… when I am collecting social security. Try that for a convoluted carrot-and-stick program.
Of course, you could just repay the amount you borrowed. Nahhh, let’s just take from the public treasury. Society owes us something.
Pete First off when I went to college, I paid $10 per credit hour. Same school now its $250 so I could be smug and brush this off but I have both a brain and a heart. The expectation is that a college degree will result in employment that will enable a person to repay the loans. The kicker is the repayment scheme and penalties. If and typically when there are periods in life that prevent keeping upwith the loan, the penalties quickly escalate and a $30,000 loan soon triples in what’s owed. The loan companies simply don’t negotiate anything close to reasonable. I’ve had collegues that made $38,000 a year be asked to pay a $1000 a month on top of living expenses. No deals where a person could realistically make some sacrifices and scrape up say $200. Nope either pay some unreasonable amount within 30 days, be sued or be allowed to delay the payments which causes more fees to enrich the company but nothing to settle the debts. The ripple effect isn’t pretty. Too much debt to buy a house, too much debt to spend money, too much debt for future students to be motivated to go to college. Do we really want or need a class of dead broke professionals or a class of potentially competent people who will simply avoid the whole mess.