OBB Student Loans Edition

Let's talk about how the OBB will affect student loan borrowers.

The GOP wants to punish people who took out student loans. Bold thesis, let's start.

Also the LA Times had an article about this, so I'm not that crazy.

Numbers:

• The outstanding student loan debt is $1.693 trillion
• 42.7 million people have federal loan debt
• Federal loan debt represents 92.2% of all student loan debt, of which 8% is private
• About 5%+/- of borrowers are in debt

This is a problem. How do we fix it?

Well, the prior administration started to wipe away debt, through targeted cancellation programs and getting the public service loan forgiveness approval process going, which the prior admin (also now our current admin) just decided not to do. The SAVE program was designed to provide low payments and the gov't would help with the interest.

That's all gone now.

This is what the GOP is proposing:

• No more subsidized loans (this is where the gov't pays the interest while you're in school)
• No more ability to defer loans due to economic hardship (job loss or medical issues).
• Forbearance is limited to 9 months IN TOTAL
• Instead of 7 repayment options, there will be only 2
  • Instead of repayment capped at 10 to 20 years, it will 30 years
  • Fixed payment plans over 10 to 25 years
  • Income Driven repayment plans
    • Instead of 5% of income, as under Biden, it would be 10%

As a reminder, the Biden administration removed the provision in law that would tax people on their unpaid canceled debt. That's gone now. Any forgiven debt, however unlikely, would be taxed as income*

The idea is that in order to pay for their tax cuts, money needs to be found and its going to be found in the pockets of people who are already struggling.

And to drive home the point that cruelty is all that matters, the administration is debating garnishing social security from elderly borrowers who haven't finished paying off their loans.

This is, as we say, bullshit.

The Congressional Budget Office has been releasing reports on the bill and how it will harm people. I'll try to put something together on that.

As always, please call, email, or fax your US senator. FaxZero is free.

* This is a principle called accession to wealth. Basically, if you get income somehow, or your income is less restricted, and you have full rights to it, its income you can be taxed on. This is the probably one of the fastest definitions of it ever, but its a basic tax principle.

I tried to do a footnote using the markdown guide and it didn't work. I just want to highlight and right click, guys, c'mon.