The Biden Administration is erasing debts of 150,000 federal student loan borrowers

AILSA CHANG, HOST:

The Biden administration announced today yet another big move to erase more than a billion in federal student loan debt. Here's President Biden speaking earlier today.

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PRESIDENT JOE BIDEN: I'm proud to announce our SAVE Plan. We are immediately canceling the debt loans for over 150,000 borrowers nearly six months ahead of schedule.

CHANG: The news offers Biden's education department a chance to change the subject after a recent string of embarrassing missteps. NPR's Cory Turner joins us now to talk us through it all. Hey, Cory.

CORY TURNER, BYLINE: Hi, Ailsa.

CHANG: So I want to start with this debt forgiveness. Exactly who is going to get this help, and how does it work?

TURNER: Well, as we just heard President Biden mention, it's part of his new repayment plan, which is called SAVE. The plan promises loan forgiveness for folks who borrowed less than $12,000 and who've been in repayment for at least a decade. Now, originally, the Ed Department wasn't going to roll this out until July, but they decided to fast-track it.

As for who it's going to help, Ailsa, we're talking about - for now, anyway - 150,000 borrowers, thereabouts. A lot of them are community college students, lower-income borrowers. It's also worth noting that $12,000 threshold - it's not a hard cutoff. So for every $1,000 you borrow on top of that, just add one year to the forgiveness time.

CHANG: OK. This sounds really great, but do we know how much this loan relief is going to cost?

TURNER: Well, there are a couple different answers to that question. Today's announcement is going to erase about $1.2 billion in federal student loan debt. More broadly, though, the SAVE Plan is likely to have a pretty hefty price tag. Think about $475 billion over 10 years. That's one estimate. It comes from the Penn Wharton Budget Model. And it's expensive because it is very generous for lower-income borrowers, which was the point, you know? Of the millions of people who are right now enrolled in SAVE, more than half qualify for a $0 monthly payment.

Now, as you can imagine, Republicans today were not very happy. They're not happy about the cost. The top Republican on the Senate Education Committee, Senator Bill Cassidy, called today's loan relief, quote, "unfair, manipulative and a cynical attempt to buy votes." It is worth noting the borrowers who are getting this relief today are going to find out about it through an email from President Biden. Senator Cassidy also said the department has focused so much on loan relief, it has failed to keep up with some of its other big responsibilities.

CHANG: Ooh, ouch. I mean, you were on this show not that long ago, Cory, talking about some pretty big missteps with the FAFSA, right? Is that what Cassidy is talking about, you think?

TURNER: Yeah, exactly - the Free Application for Federal Student Aid. This year, the department released the FAFSA three months late. It was really buggy, and it included a handful of pretty serious mistakes that would have hurt disadvantaged students. Though the department is now fixing those mistakes, families are going to have a lot less time than usual to decide if they can actually afford the cost of college, Ailsa. And that's why, you know, I'm hearing from some families, students and, of course, Republican lawmakers who are looking at today's debt relief news and asking, how can the department do something this big ahead of schedule and yet make such a mess of the FAFSA?

CHANG: That is NPR's Cory Turner. Thank you, Cory.

TURNER: You're welcome. Transcript provided by NPR, Copyright NPR.