Biden administration opened ‘new chapter’ on college financing, Kvaal says

Biden administration opened ‘new chapter’ on college financing, Kvaal says

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James Kvaal is the outgoing U.S. under secretary of education. His tenure ends with the inauguration of Donald Trump on Jan. 20.

After decades of an accelerating student debt crisis, Joe Biden is the first president to use every available tool to alleviate the burden of borrowing for college. He will be remembered for turning the page on the worst consequences of the country’s failed experiment with debt-financed college and beginning a new chapter on how to pay for higher education.

For the past two generations, increasing reliance on student debt seemed like an easy solution to paying for college. Loan terms were set at no cost to the government, and students were expected to easily earn enough to pay the loans back following graduation.

But it didn’t work out that way. One in three borrowers don’t graduate, leaving them with debt but no degree. Because interest piles up so fast, more than 20 million people owe more than they borrowed. Before the pandemic, more than a million people default on their college loans every year.

Some critics say that student debt affects borrowers of all income levels equally. But hair stylists, massage therapists and other workers earning modest wages often went into debt to get the training, certificates or degrees needed for their jobs. And debt is not just a problem for the roughly 43 million people with student loans. It hurts their families and communities because it stands in the way of economic security, homeownership and potential new businesses.

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James Kvaal, the U.S. under secretary of education under President Joe Biden

Permission granted by U.S. Department of Education

 

Others say we should eliminate student debt altogether. But until Congress and states invest in lower tuitions and larger scholarships — as President Biden has proposed — loans will remain essential for many low-income and middle-class students.

The COVID-19 pandemic exacerbated these festering problems. Nearly 3 of every 5 students lacked adequate access to food or housing during the pandemic, putting them at risk of dropping out. And most borrowers of modest means expected they couldn’t afford loan payments.

By pausing payments and interest on federal loans, the administration saved the average borrower in repayment more than $3,800 and helped them persevere through the national emergency. President Biden also fought partisan opponents in court for up to $20,000 in one-time relief for borrowers — all the way to the U.S. Supreme Court.

While the pause gave borrowers a break, the U.S. Department of Education worked on long-term solutions.

First, we focused on people who were owed forgiveness but were blocked by bureaucracy.

For example, only 7,000 people had ever received Public Service Loan Forgiveness from the program’s creation in 2007 to when President Biden took office in 2021. Many public servants planned their careers around this benefit only to learn too late that they had the wrong type of loan or had spent years in the wrong repayment plan. Now, more than 1 million borrowers have received the relief they earned.

We also kept promises to borrowers with permanent disabilities and those who were cheated by colleges. In total, we have approved more than 5 million people for loan relief. Many more borrowers are set to benefit in the years to come.

I’ve heard countless stories about what this life-changing relief has meant for Americans. They say they are finally able to plan for retirement, pay off medical expenses, or even have more children.

At the same time, not all of our efforts succeeded. Some 40 million borrowers and their families continue to feel the weight of both the Supreme Court decision to deny one-time relief and litigation hindering our ability to help borrowers experiencing hardship.

Second, to help people with low incomes and high debts, the Biden administration created Saving on a Valuable Education, or SAVE — an income-driven repayment plan that could cut monthly payments in half for eligible borrowers. People making payments would finally see their balances going down, instead of up due to ballooning interest.

SAVE served almost 8 million people before partisan lawsuits held it up, and it’s now under judicial review. The SAVE plan is similar to other repayment plans the department has created over the past 30 years, and we continue to defend it in court.

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