I already help to pay for the education of many of the 17-year-olds in my area when their parents choose to send them to the local public high school. I do not see much difference between that long-standing practice and helping to pay for many of the 18-year-olds who continued their education at the local college. This executive order is imperfect, and yes, it is back-dated and does not cover everyone equally — but at its core, it is an extension of that more general starting point; namely, do we want to support education or do we not?
As a society, I believe we should, and that support should not suddenly stop at age 18. By continuing it, we gain a more productive and adaptable workforce, a more informed citizenry, and more fully developed individuals. Others are welcome to their own Platonic vision of a just and flourishing democracy, but that is mine — and it is a vision that has already been put into practice in a strong form in pretty much every rich-world society on earth, save one. Instead, we impoverish many of our young people, force students from the humanities, stifle economic growth and job mobility, and further entrench intergenerational wealth (or lack, thereof).
Again, this EO is far from perfect and I wish it could be as forward-looking as it is backward-looking, but at least it is a step in the right direction.
It is a highly-regressive plan, which I generally oppose. I believe government assistance should be primarily directed to the needy in society, which of course this does not do. Unfortunately, it is likely to spur yet more inflation.
There were so many better options, addressing interest rates and the cost of higher ed. Choosing this one is so disappointing.
Thank you for this. It’s a very helpful article in terms of answering some of my questions. According to the article:
It’s for federally held undergraduate, graduate and Parent Plus loans. (Note: Perkins would not be included, as these are technically school-issued loans using federal funds.)
The loans had to be disbursed by mid-June 2022 in order to be eligible.
As for whether this would entice people to borrow willy-nilly because people would figure the loans would end up forgiven, I don’t believe so. I say this as someone who worked in financial aid for a number of years. I didn’t see my graduate students, who tended to work in the non profit sector & had a good chance of qualifying for Public Service Loan Forgiveness, borrow based on that hope.
My kids both took out federal direct unsub loans for this coming school year. I’ve seen lots of news outlets saying that loans must be “disbursed” before July 1 to qualify. I’ve also seen a couple articles that say loans needed to be “originated” by July 1.
However, I’ve seen nothing on the official government releases that mentions the July 1 cutoff.
Anyone know if loans for this coming semester will be included or excluded?
Your May graduate’s graduation would have been reported to the loan company by the school. Because he has a six-month grace period following his graduation date, he won’t get communications for awhile. They will probably come to his email, so it’s important that he update his email address with his loan servicer. He is no longer in school, so his eligibility for forgiveness will be based on his own income. There will definitely be challenges to implementing this program, and I expect bumps.
You did mention that he needed a final co-op to graduate, so it’s possible that his last-day date will be the last date of his co-op term (financial aid uses last day in final term to determine grace period start date). It doesn’t change anything for his forgiveness eligibility, though.
Did you see this info on anything officially released by the fed gov? Can you point me to where I can read it? I’ve seen it reported in random news articles but nothing on the fafsa or White House official releases.
NASFAA release is reporting they verified the loans must have been disbursed by 6/30/22.
NASFAA has confirmed with the Department of Education (ED) that loans disbursed by June 30, 2022 are eligible, as opposed to “loan originated,” as has been reported in the press.
NASFAA also confirmed that students who were dependent for financial aid purposes in the 2021-2022 financial aid award year will have their eligibility for forgiveness determined based on parental income. I am guessing this is to determine forgiveness eligibility for students who have not yet graduated. I assume for students who graduated in 2021-22, eligibility would be based on their own income … but that has not been specifically addressed, so I don’t know that for sure. In re-reading NASFAA’s information, it’s actually possible that parent income information may be used to determine eligibility for all students who were dependent for financial aid purposes in 21-22 … so we just have to wait until all of the details are out. I guarantee that the financial aid community will be asking that. The NASFAA link provided in @Mwfan1921’s post is the one everyone with questions should read, because they get their information from the Department of Education & Federal Student Aid.
Thanks for linking the release. I did read it earlier and this was actually the write-up that confused me. Unless I’m missing something obvious in the article, this is the only thing I see mentioned about current students:
“Current students with loans are eligible for this debt relief. Borrowers who are dependent students will be eligible for relief based on parental income, rather than their own income.”
Oh well, despite this, it sounds like the July 1 cutoff is being pretty widely confirmed and reported. Bummer.
… the proposed rule would cover the borrower’s unpaid monthly interest so that their debt doesn’t grow as long as they make their monthly payments. That includes borrowers whose monthly payments are $0 because their income is low, according to ED.
That helps to make sense of the no-interest part of the repayment changes.
The problem that I have with student loan forgiveness is that the underlining fundamental problem has not been addressed. We will be back in this same situation within 10 years. It is definitely a raw deal for those who made the choice not to go to school due to financial constraints (and trying not to go into debt).
We are just treating a symptom (overwhelming student loan debt) without touching the root cause of the problem (cost of an education and interest rates). We have actually just made higher education more expensive because why would colleges make it cheaper to attend as long as the federal government will pay the bills (and then forgive their own loans to borrowers).
