Foundation for research on equal opportunity. Gentlemen, welcome to both of you. Tell us a bit about the foundation for research on equal opportunities. Guest its a nonprofit nonpartisan think tank focused on using marketbased solutions to lower the costofliving for everyday americans. Host in the center for American Progress . Guest we are a nonpartisan nonprofit focused on building things like inclusive economy, tackling racial injustice, climate change, and of course, education. Host here is the article from nbc news, Biden Announces New plans for Student Debt Relief for millions. Millions. This is the second attempt, so whats different this time . Guest the plan this time, plan b, focuses on categories of borrowers unlike the broadbased options the president first pursued and announced in 2022. Or at least that was proposed. This time, you know, the first group of borrowers centers on those who have been paying interest or have been paying more than what they took out because of interest on their loans. People who have been paying for 25 years or more. Providing forgiveness for them. Looking at folks who have been in low financial value programs, opportunities there, and another group of borrowers providing forgiveness, if they qualify under other plans. The fed group is looking at hardship. We are seeing a more targeted approach as we look at the new initiative for debt cancellation. The first time they use the heroes act, for international emergencies. This time they are doing under the Higher Education act of 1965. Host preston, do you see this as different from what was rejected by the Supreme Court and the reasons it was rejected . Guest its a different legal strategy but at its core, i dont think it is fundamentally different. At its core, its illegal, the president doesnt have the ability to forgive Student Loans by executive fiat. And even the narrative that it is more targeted, the actual plan is not very well targeted. This Economic Hardship category would essentially be a black box for the secretary of education to forgive whatever Student Loans he wants to forgive. There are no real parameters around what constitutes a hardship. This could end up being just as expensive and costly as the loan forgiveness plan that was struck down by the Supreme Court. Host you mentioned the big focus would be on accrued interest. Give us a sense of how many people would be impacted by that. And the borrowers who have been paying for years but havent made a dent in their principal. Guest the administration released numbers this week, we dont have all the estimates that are out there. I dont want to misquote, but i think it is around 20 million or so that would fall into that category, that group of people who have taken out loans and actually owe more than what they originally took out because of interest. I know that the plan as of a hole under all four categories would help about 30 million borrowers, but i think its around 20 million, that first group. The administration has different numbers out there for that. Host you could be paying back for years and just never get to principal . Guest yes. Even under some plans, if you are paying less, making payments but its less than what would cover principal and interest, you are paying the interest and thats compounded on the loan. Then you end up paying back more than what you took out. Thats just the structure of the loan program, they charge interest right now. Fixed Interest Rate right now about 5. 5 for unsubsidized Student Loans that people are taking out, the interest is for the life of the loan. Host it varies widely, depending on the type of degrees this is from nerd wallet this is the average debt for the type of degree. Bachelors degree, average of 29,000. Other ones, say for instance, law school, 132. Dental school, nearly 300,000 in debt. Preston, you have written an article called student loan cancellation enters the crystal ball era. What does that mean . Guest referring to the hardship authority the secretary of education is claiming in order to forgive Student Loans. Essentially, this is a black box, a crystal ball. The secretary of education looks at a bunch of different factors, they dont exactly say which factors. They give themselves wide authority to use different factors to basically assess whether a borrower is in hardship and they say well, if the borrower is in hardship, we have the authority to forgive the loans in full, current and future borrowers, and there are no rules around what constitutes a hardship and what kinds of students are experiencing severe difficulty paying back their loans and what just seems like a hardship. What is the secretary of education just calling hardship for the purposes of doing mass loan forgiveness again because they were denied the first time . Host we will open our phone lines. This is how they are split up this time. If you have Student Loan Debt currently, call us on 202 7488000. If you have already paid off your Student Loans, 202 7488001. Everybody else can call us on 202 7488002. You can also text us at 202 7488003. We are on facebook and on x. Preston, we touched on this a little bit, but what are the legal challenges that you think this might face . Guest its the same kind of issue, a major questions issue. Using it as a rule that will costs hundreds of billions of dollars, thats not the authority that Congress Gives away like that. He needs to be explicitly authorized through congress and signed by the president. None of that happens here. For the exact same reason that the Supreme Court struck down the original plan, which would have caused about 400 billion, i expect the courts will find the new plan is legal simply because the secretary of education does not have the authority to forgive this volume of Student Loans without congressional say so. Host what do you think of that, jared . Guest i disagree. The authority being used at this time is under hga, paragraph a, subsection a, dealing with waiver, compromise, and release of Student Loans. Its a pretty broad authority. Hes using the same Regulatory Authority he has used for other repayment plans. If you think about the pay as you earn plan, which came out under president obama, successful, the legality was not challenged, those plans still exist and thats the savings same authority being used here for cancellation. There is also a congressional opportunity for cancellation already built in, right now, through teacher loan forgiveness, ps lf, you name it, the forgiveness exists and has been approved already. This was a law or written by congress that provided this authority to the secretary and the secretary is exercising that authority through the plan, through the alternative. Host do we know about how much this will costs if the loans are forgiven . Guest not right now, that will come out with the final details, there will be a section described in the process around what the plan costs. Host mark is up first from jefferson, colorado. Caller how you doing . Ok, i firmly believe this is my opinion, my opinion only, as you talk about Student Loans back and backandforth, backandforth, nobody mentions the g. I. Bill. I put myself in college on the g. I. Bill, as my brothers did, as my father did, as my grandfather did. I have never met a veteran with a student loan. In fact why, for the life of me i do not understand that you dont push this issue. Five to six years of your life, you get a college degree. Now at the same time that this all happens, we are listening to people paying interest for 20 and 25 years, as one of your speakers has said. How many people have a mortgage . How many have a new car, boat, or rv instead of paying off their student loan . They are playing and buying toys. You can drive an older car. You dont need an rv. You can rent one. Why . Why doesnt anybody talk about this . Why doesnt anyone express this . Lets take the conversation a bit further than im sorry i cant pay my student moan. How many of these folks have turned around and quit college . You listed the categories. Doctors, phds, lawyers, it costs money to educate yourself. Those are folks who make way more money than the average person in the populace. Lets talk about this, they make all kinds of money. When you quit paying on your student loan, maybe you ought to be drafted for four years and we will waive your loan in exchange for four years to six years of service. Host all right, lets get an answer. Jared . Guest i believe that there are Service Members who do have Student Loans. I dont think its as common in the student populace. I want to thank veterans for their service, but it isnt the only avenue or opportunity when it comes to education. There are people within the population who wont have that opportunity under the g. I. Bill. Its great that they have those, but for those who can, we need to make sure we have a functioning student loan system that works for everyone. The gentleman talked about org edges and things like that, you cant live on your student loan and your education. Its different, fundamentally different. I support having doctors and lawyers and such, i believe we need them, but those are expensive degrees. Particular, there might be a payoff 20 years later, but upfront costs, we are seeing a decline in real challenges when it comes to the profession, given the highcost. Host what do you think . Another way for debt forgiveness. We can put these students, they can pay off their loans, maybe four years of giving back. Something like that. Where they are getting the necessary skills, but we are giving back to them the amount of money that we are going to pay off in that loan. There is another way. My name is lehr way and im running as a republican and i hope to be written in come november. Host all right, good luck with that. Go ahead, jared. Guest i wish you luck in his race. The first piece of this is yes, Student Loans are expensive. Its not just people coming from those backgrounds. The amount of debt that people carry has risen. 3500 in 1990 to like he thousand 22. I would also say that this is not the only strategy when it comes to addressing the problem of Student Loans, starting the Obama Administration it was another impact costsaving measure, keeping costs down and providing affordable actions for people. Also, there are a bunch of proposals that the president unleashed or unveiled in the last month. One is the reducing College Costs fund, 12 billion to look at how we actually keep costs down while providing these other opportunities through cancellation to better the system as a whole. Its a multipronged approach. Host chris is in manassas, virginia, and has Student Loan Debt. Caller my issue is twofold. I have tried over the past year multiple times, 30 times, probably, to call, and i have waited half an hour, 45 minutes, i can never get through to the loan holder, servicer, whatever you call them. That is in addition to emails. No response from any emails for ever for a year. Im almost 65. My wife became a paraplegic. Im supposed to prep her for getting ready for retirement and i have 40,000 in Student Loan Debt and i cant even talk to them about maybe getting a more appropriate amount, consider we all if i for wong longterm medicaid, no significant assets, they take half of everything and anything. If we were to sell the house to downgrade to something smaller and use the equity as something to live off of in addition to retirement, i would, they would take half the equity in the house. I dont know, its a grip broken system and i cannot even communicate with the loan servicer. Im trying to prep for retirement. Host what kind of degree do you have . Guest its a bachelors in Geographic Information systems and global mapping. Host and you are getting ready to retire . Guest i would love to. I went to school in 2010 for this degree, graduated with honors in 2012. I hit a wall of age discrimination. I got nothing. All my history was in bluecollar work, repairing aircraft, now i fix commercial kitchen equipment. The employer is not the problem. My income is not the problem. Its just that the debt, my wifes disability, etc. , has loaded me at a time when im looking at retiring, age wise. Host all right, preston . Guest its an important issue, the problem around administering the Student Loan Program and it turns out the federal government is not good at running the loan program. When people try to get in touch with servicers, to get their payments started up again, they can be on hold for two or three hours, they could call 30 times, as chris said. Those are the issues that we need to address here. I wish the department would devote more time to doing the hard work of cleaning up student aid administration, making the Program Simpler to navigate, making sure people can get in touch with servicers to get in touch with the right repayment plan. They are in stand putting their ener into the student loan forgiveness plan, something that will give them favorable headlines, maybe help them get through an election, but its not the hard work of making sure the Program Functions and im worried that in chasing these high profile loan cancellations, the department of education has neglected the hard work of governing. Guest i believe that the administration is trying to improve the student loan system as a whole, from obama to trump, biden, we have done just that, a Service Platform to change the system and a promise from congress, it has been flat funded for a while, some of that is due to cancellations, but there are Real Investments that they have been asking for from congress to say that look, we have all acknowledged there have been problems here, but we really need congress to be investing in the Administration Loan programs in the belief that we have that the office of federal student aid can do so. Host eric, new jersey, good morning. Caller i just wanted to point out that we should be operating under a sense of fairness. I think that biden is potentially alienating at least half of a dozen groups with this nonsense of pandering in order to get votes by forgiving Student Loans. Let me explain very briefly. If you had people that saved up for their childrens education and didnt go on those vacations, i wish biden would tell me eric, guess what, we will replenish your 401 k that you had to dip into two pay for your kids education. There are students who didnt go to better colleges on account of the loan situation. Other students who stayed home and commuted and didnt live in dorms. You have all these groups. Now all of a sudden there is a Forgiveness Program for a very select group of people and it basically, it pokes people in the eye that have made life decisions and sacrifices only to be betrayed like this. Host what do you think about the idea that its fundamentally unfair to the people who made sacrifices . Guest i dont think its unfair. We have Public Policy set up to benefit certain categories of people, and thats ok, as long as there is a rationale to help in advance those interests. The opportunities provided to others when debt was not as high, 1990 and beyond, you could pay back a student loan because the original principal was so low. Its not the case anymore. Some of that has changed because of the fundamental rising costs. The Student Loans may not be like those of years past. I dont think that people should have to sacrifice and soldier on, when we had to have the opportunity to soldier on, taking a look at that to see that we need to make some changes here, it shouldnt be that difficult to access the opportunities in the American Dream. Host he mentioned rising costs. Its going up way past the costofliving increases. Others are saying that college isnt worth it anymore, im not going to get the economic benefit of what i am going to have to put in. What you think about that in the impact of that long term . Guest rising College Costs are absolutely an important issue we need to be discussing, but im worried that student loan forgiveness doesnt address the issue of underlying rising College Costs. The issue is that they feel like they can because they feel they will be subsidized by the federal government and colleges are not holding up their bargain in the terms of using the value they expect from a Higher Education. A lot of students will end up with a degree that doesnt have a lot of labor market value. We should say to colleges that if you need to continue participating in these federal grant programs, getting these federal loan dollars, you have to start showing value, keep costs down, it degrees if you have labor market elements. If we forgive loans without Holding Colleges accountable for what they are producing, we are just kicking the can down the road and be back here five years from now. Host jared . Guest i think we should hold counted out colleges accountable, i agree on that. How we do that, there might be disagreement, but we need to make sure that colleges have skin in the game when it comes to this. It shouldnt just be the federal governments problem. We need participation guest guest from colleges. Participation from colleges. Host moses, lake elmo. Good morning. Caller the president and the executive branch does not print money. They have no authority to pay anything at all. It has to go through the purse, which is congress. Second, demo