In January, as one of his first acts as president, Joe bidenJoe BidenTop GOP Senator: “Far-Left Democrats Drive The Bus And Joe Biden Is Right Here For The Ride” Political Study Should Give Democrats Shock Fauci Says It’s A “False Story” To Think Vaccine COVID-19 not needed if Merck drug approved PLUS ordered the Education Department to maintain the government’s freeze on federal student loan repayment plans. The Trump administration initially suspended federal student loan payments in March 2020.
As a result of the move, borrowers on federal student loan repayment plans will not need to make payments until October 2021, at the earliest, and interest will not accrue for borrowers either. federal student loans during this time, including for those who choose not to make payments.
Americans indebted to private student loans – which were much more commonly used before the Obama administration – do not benefit from this policy.
The decision to freeze loan payments will allow millions of borrowers to save money, pay bills or work to reduce their debts during the freeze. This will be especially beneficial for workers in government agencies and nonprofits who carry heavy student loan debt, but it could cause substantial long-term damage to millions of other Americans.
During the freeze, all borrowers who work for nonprofits or government agencies and are enrolled in an income-based repayment plan will continue to accumulate credits towards receiving student debt remission in the under the Public Service Loan forgiveness program (PSLF).
Under the PSLF, borrowers enrolled in income-based repayment plans who make payments for 10 years while working for a local, state, or federal agency (including public school teachers) receive a total discount of debt on their federal student loans. Employees of many non-profit organizations not affiliated with the government are also eligible.
As the Trump-Biden loan repayment freeze continues to count non-payments as payments for the purpose of qualifying for public loan cancellation, there are government workers and nonprofits who now receive student debt cancellation without having made the full 10 years of payments. . And the longer the freeze lasts – there’s nothing stopping Biden from perpetually renewing the halt in payments – the more disproportionately it will benefit those workers compared to everyone else.
It is important to keep in mind that there are no forgiveness limits in the PSLF program. So, for example, it is possible that a government employee with $ 200,000 student loan debt could save hundreds of thousands of dollars under the PSLF program once the 10-year mark is reached, which, thanks to Trump and Biden, is now easier than ever.
Initially, the Trump administration instituted the freeze to help deal with the potential economic effects of COVID-19 lockdowns. At the time, no one knew exactly how things were going to play out, and the Trump administration has been cautious, for better or for worse.
Today, however, the situation is completely different. The Biden administration knows the vast majority of government and nonprofit employees have not lost their jobs in the wake of the pandemic, so why the federal government continues to freeze loan payments for workers who have not lost their jobs? Even before the COVID-19 pandemic, borrowers on an income-based repayment plan paid nothing after losing their jobs.
And, even more confusing, why would Biden continue to count non-payments as credits to meet the demands of the public student loan forgiveness program?
The only logical explanation is that the Biden administration is trying to keep government employees and Biden allies in nonprofits (including think tanks) happy, regardless of the costs imposed on others.
The federal government has already amassed billions and billions of dollars in additional debt in an attempt to cope with the effects of the pandemic. Wasting billions on cronyism deals on government officials and employees of nonprofits as other Americans lose their small businesses and get crushed by COVID-19 restrictions is downright cruel.
The costs of Trump-Biden student loan policies must be factored into hurting someone else, either through taxes or by continuing to print money, which has already caused levels of damaging inflation in key industries, including housing. And the problem will only get worse over time, as federal debt payments continue to eat away a growing proportion of the federal budget.
America must change course now, before this serious problem gets even more out of hand.
Justin haskins is the Editorial Director of the Heartland Institute. Follow him on Twitter @JustinTHaskins.