February 21, 2024 - NPR
By Ana Perez, Steve Inskeep
An email went out this morning to some student loan borrowers basically saying, you're debt free.
On Wednesday, the federal Education Department zeroed out loan balances for nearly 153,000 borrowers. They are people who borrowed $12,000 or less, have been paying their student loans for at least 10 years, and enrolled in the Biden administration's new repayment plan called SAVE launched last summer.
"We're providing debt relief to people who need it the most," said Education Secretary Miguel Cardona on Wednesday in an interview on NPR's Morning Edition. "We're also addressing the root cause of the issue, which is, the cost of college is out of control," Cardona said.
The Saving on a Valuable Education (SAVE) repayment plan has become a key vehicle for President Biden and Secretary Cardona since the Supreme Court last year struck down the administration's plan to forgive hundreds of billions of dollars in federal student loan debt. Republican lawmakers have tried to stop the SAVE plan, arguing that it is outside of the administration's authority and criticizing the president for campaigning for votes with the new policy.
Wednesday's debt cancellation announcement comes after a shaky rollout of the new FAFSA application resulting in a delay of student aid award letters, along with people unable to fill out the form.
NPR's Steve Inskeep interviewed Education Secretary Miguel Cardona about the SAVE plan and problems with the financial aid application and awards process. The conversation below has been edited for length and clarity.
By paying off people's excessive debts, you encourage colleges to keep charging more and more. Is there a moral hazard involved in forgiving debts which allows colleges to encourage people to borrow more in the future?
It's a moral hazard if you're only doing debt relief, but I believe we're balancing it out with accountability on colleges and making sure that the return on investment is clear. And, where we're putting pressure on those colleges that are charging $150,000 to $200,000 for a degree that students could get for $50,000 somewhere else.
Would you explain how your authority is different when relying on this 1965 law [Higher Education Act] than it had been under the law the Supreme Court rejected for you?
The Supreme Court rejected the president's most bold plan to provide debt relief in our country's history using the Heroes Act. It was pandemic related. The Supreme Court struck that down. However, the mentality of making higher education more affordable has never diminished in this administration. We use the Higher Education Act [of 1965], the authority that it gives me as Secretary of Education to, for example, make payment plans based on income. We're using the negotiated rulemaking process to come up with a debt relief plan that will positively impact Americans and give them an opportunity to to get back on their feet. We're unapologetic about this.
Can this debt relief, in your view, survive any court challenge? And, can this debt relief survive a change in presidential administrations?
We're using the regulatory process, which we believe includes public comment and negotiations with folks that don't agree with us. So we do believe through this process it can continue, but we recognize that no matter what turn we make, we're going to have folks challenging it. There are some that benefit from the system the way it was and I expect to hear from them. And, if I don't hear from them, that means I'm not pushing hard enough.
Mr. Secretary, in moving up this announcement of the student loan debt forgiveness, some people will naturally wonder if your attention is on the right problem right now because you're in the middle of serious delays with FAFSA, the standard college financial aid form. Many people are going to get close to their college acceptance dates before they hear back from the federal government about financial aid. Are you on top of that problem?
We absolutely are. Since day one, we've been fighting, whether it's fixing public service, loan forgiveness, doing the income driven repayment adjustments. And with regard to FAFSA – yes, we're working aggressively there. We recognize that there are delays and we're working daily around the clock to make sure that we get the information as quickly as possible. We're moving in the right direction. Change is hard. We're focused on it. As a parent of a high school senior myself, I recognize that delays are challenging. But at the end of the day, what we're delivering is going to be better for the American people.
I grant that the overall effort is to improve the process. But the immediate problem, as you know, is there's been this problem with calculations for adjustments for inflation. People are experiencing delays they would want to have heard in January, but may hear in March. And many people have college acceptance dates of May. Can you guarantee the public that they're going to get their information in time to think about their college decisions and answer on time?
Yes. We support those colleges that are stepping up and saying, you know, I'm going to push back the date. It is a major change. We recognize there are delays and those are frustrating. But at the end of the day, more students will get more aid, more access to college; and at the end of the day, that's the goal.