The NPR Politics Podcast - 8 in 10 Young People Want Government Action On Student Loan Debt

Episode Date: April 25, 2022

Thirty-eight percent of Americans under 30 want to see student debt cancelled entirely. Despite a campaign trail promise to eliminate some debt, President Biden has yet to take any action beyond continuing Trump's pause on loan repayments. For years, an Education Department loan program has failed to live up to the promises it made to students — the department is now promising to make amends.This episode: White House correspondent Tamara Keith, congressional correspondent Susan Davis, and education correspondent Cory Turner.Support the show and unlock sponsor-free listening with a subscription to The NPR Politics Podcast Plus. Learn more at plus.npr.org/politics Connect:Email the show at [e-mail] the NPR Politics Podcast Facebook Group.Subscribe to the NPR Politics Newsletter.Find and support your local public radio station.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Hi, this is Megan in Hood River, Oregon, and I am currently celebrating my first day as a married couple with my wife, Paige. This podcast was recorded at 2.09 p.m. on Monday, the 25th of April. Things may have changed by the time you hear this, but we'll be celebrating and soaking up the sun in Hawaii. Enjoy the show. Nice. Congratulations. I'm always amazed at the people who listen to our podcast who have these like great, big, momentous, wonderful personal life events. And like one of their first thoughts is like, I got to send in a timestamp. I mean, like, what is married life? Is it different? Well, yeah, I got a timestamp on the NPR Politics Podcast.

Hey there, it is the NPR Politics Podcast. I'm Tamara Keith. I cover the White House. I'm Susan Davis. I cover Congress. And Corey Turner is here from NPR's education team. Hey, Corey. Hey. Welcome back on the pod. And Corey, we have you here because we want to talk about student loan debt and also the politics of it. President Biden has lost considerable support among young people. He's down 18 percentage points from a year ago, according to a new poll from the Harvard Institute of Politics. One in three young people, that is people under 30, believe that political

involvement rarely has tangible results. Four in 10 say their vote doesn't make a difference. And one big issue on their minds is student loan debt. 85% of young Americans favor some form of government action on student loan debt. Corey, you cover this issue inside and out. And this is a thing that President Biden promised on the campaign trail, $10,000 of student loan forgiveness, and it hasn't come to pass. How many people would be affected by a move like that? Or is it all pretty academic right now because it's just not going to happen? Well, you know, it's funny, Tim. I was looking around because I knew you wanted an answer to this question.

So I was trying to find something approximating an answer. And it turns out, a couple of researchers at the Federal Reserve Bank of New York put something together in just the last few days. And it's really fascinating. So they looked at this $10,000 pledge of Biden's, which, you know, on the trail, he usually when he said it, he said, hopefully Congress will act. And it's pretty clear at this point that Congress is not going to act, which is why so many people are waiting for him to do something. But in terms of the $10,000 promise, what these researchers found, a couple different things. Number one, going to what you mentioned about the polls,

over 60% of forgiven loan dollars under the $10,000 plan would actually benefit those under 40 years old. They also found that forgiveness... It's a demographic overlap. It is a demographic overlap. Yes. They also found forgiveness of $10,000 per borrower would cost about $320 billion or so. And here's a really interesting number to me. It would eliminate the entire balances of about 12 million borrowers. Wow. And the share of overall borrowers, what would that be, like a quarter of them?

So 12 million borrowers, it's between one and three, one and four borrowers. This to me is such an interesting policy because it's between one and three, one and four borrowers. This to me is such an interesting policy because it's been a little bit of a political hot potato between Congress and the White House because there's ostensibly a lot of support for it on the Hill, particularly among the progressive left. But leaders in the House and Senate, Speaker Nancy Pelosi has been a skeptic about this as a policy, certainly doesn't think that the president has the authority to do it. She has said she thinks it would have to come from an act of Congress, but she also doesn't have a whole lot of interest in taking up legislation that would do it. And what you hear from Capitol Hill is like, yeah, if the president wants to do this as an executive order, that would be great.

But no one's really making a big case right now on the Hill that this is legislation that needs to be passed. Which is funny, because when the White House is asked about it, the press secretary Jen Psaki most recently said the president would be happy to sign a law. The president would be happy to sign a bill that does this that is sent over by Congress. Although it's not like people that have student loan debt haven't had some benefit from the government in recent years. I mean, most people with student loan debt have been had the ability to not make any payments on their loans for I think years now, right, Corey? I mean, the current policy that's put a pause on the interest rates and the payments has been in effect since the Trump administration. Yeah, it's been more than two years. And it's not going to expire at the earliest until August. I think the most interesting thing for me about the past two

years is how few people have actually taken advantage of the fact that no interest has been accruing. You know, for folks who are in the financial position to actually make some payments towards their loans, the last two years have been the perfect time to do it. And we should say that this happened two years ago, because there was a terrible pandemic that befell the world. And this was part of the economic relief in the face of what was an absolutely frightening economic situation on top of the public health situation. But then it's just hung on, even as, you know, even as the President of the White House talks about, well, now we're going to be able to live with the virus, and we have all the tools.

And, you know, the acute phase has passed in terms of the economy, in terms of the employment situation, in terms of all of these things. And yet the White House keeps extending this moratorium on student loan repayments. Well, it's, you know, it's incredibly popular. Who doesn't like free money, right? As an idea, I think it's very popular. I also think it's very popular among Democratic voters. So it's a little bit of a base issue for the president. But also in terms of the economic wisdom of it, like you're totally right, Tam, like the decision was initially made as a form of economic stimulus because the economy was contracting at a terrifying level at the beginning of the pandemic. But right now we're in a very different economic picture. I mean, inflation is a problem right now.

Putting more money into the system as a matter of government policy isn't seen as wise anymore. So I think that sort of the timing and the mood for college loan forgiveness has shifted as the broader economic picture of the country has shifted. And I don't think it probably has the same level of support because of the way I think a lot of this could be framed as, you know, if you don't support this policy, it is a bit regressive. It benefits a smaller subset of the country. I think people who have college degrees, for a lot of the country, frankly, they are the elite. A lot of wealthier people would benefit from blanket loan forgiveness program, like forgiving $10,000 in debt? Would it be wealthy people who ran up a lot of college debt becoming doctors? I mean, there would be some of those in there. Yes. But if you're, let's say you're talking about Biden's $10,000 plan. Number one, it's not going to help those doctors very much. It's going to be

$10,000. We also know that roughly, I think it's roughly 40% of folks with student debt did not complete. They didn't get a degree. So these folks are often in the toughest spot because they can't pay for their student debt because they didn't get the job that's helping them pay for it. In terms of low income versus high income, just going back to the study I mentioned earlier from the Federal Reserve Bank of New York, we also know that this $10,000 plan, roughly 25% of that debt forgiveness would go to low income neighborhoods, while roughly 30% of forgiveness would go to high income neighborhoods. So, you know, there's a bit of a balance there. The folks at the Federal Reserve said, though, with an income cap on eligibility at around $75,000, you could really dramatically shift the balance in favor

of low income borrowers. I haven't heard the administration talk about an income cap. But I mean, anything's possible. All right, well, we are going to take a quick break. And when we get back more on student debt and how to deal with it. And we're back. And the US Department of Education said last week that it will retroactively help millions of federal student loan borrowers who have been hurt and held back by this program known as income-driven repayment. That announcement came after years of complaints and lawsuits and most recently an investigation from Corey Turner that revealed that these plans have been badly mismanaged by the department and the loan servicing companies that the department works with. So, Corey, can you explain what this program was, what these income-driven repayment plans

are, and what was going on? Yeah, the whole point of IDR, Tim, was really to help borrowers keep up with monthly payments. Basically stretched out, you know, the traditional student loan repayment plan is 10 years. And IDR stretched it out to between 20 and 25 years. And it tied your monthly loan payment to your income and your family size. And it's actually possible under IDR, if you're not making very much money, you can make an official $0 monthly payment. That might sound a little weird. The whole point of it is, when I say official, it gives you credit towards what is essentially the pot of gold at the end of the IDR rainbow, which is the promise that if you stay in this plan on track for between 20 and 25

years, depending on which plan you're in, the rest of your loans will be forgiven. And so what we found is this program where, you know, at this point, at least 4 million people have been repaying their loans for more than 20 years. And yet the number of people who have qualified for forgiveness under IDR is like just over 100. I mean, it's really remarkable. Yeah, it's really remarkable. And so what we found in our investigation is all sorts of problems. I found several student loan servicing companies that weren't actually actively keeping track of borrowers' payments toward forgiveness. They didn't know.

And so a borrower would have to call and say, hey, how am I doing? And the servicer would have to do like a 20-year manual recount. We also found that just the basic paperwork, especially for borrowers who have been in the program technically long enough to potentially qualify, the old paperwork for this program was awful. And so they're just huge questions that not even the Department of Education can easily answer about whether or not borrowers have made enough

qualifying payments. Okay, so what is the fix? Will it fix it? And in theory, how many people are going to be helped by whatever the education department is doing here? I mean, I think one of the most interesting things about this fix addresses an issue I didn't even mention, which is one of the things that happened over the last 10 years. IDR number one was really hard to enroll in. It was very paperwork intensive. And so what often happened when like a borrower would call their loan servicer, the loan servicer, because it took so long over the phone and servicers don't get paid a ton of money to minister to the needs of borrowers over the phone, folks would just be put in forbearance because it's really easy. Forbearance is very bad. You get a break from

your payments, but interest continues to grow and grow and grow. Borrowers aren't supposed to be in forbearance very long. And so one of the things the department is doing now is for folks who are in forbearance for more than 12 straight months or more than 36 months combined, which technically should be a no-go. Nobody should be in forbearance for more than three years. But we know, according to the department, more than three and a half million people were in forbearance that long. They're going to get all of that time now credited towards loan forgiveness. That's a big deal for them. So just to be clear, when you talk about forbearance, is that like different than what we were talking about before, which is a moratorium on payments having to be repaid?

Technically, what we're in right now is a forbearance. But what sets this time apart is interest is not accruing. Whereas in a traditional forbearance where you call your loan servicer and say, I'm having trouble making my payments. Can you give me a pause? They can pause your payments and put you in a forbearance, but interest will continue accrue. The last two years, interest has not accrued. Corey, when I think about this, I mean, you have done a lot of reporting on various programs in the Department

of Education and how they are, frankly, largely not very well run. And I wonder if you take a step back from your reporting and look at it, what does it tell you about the state of the Department of Education? I mean, is this a, frankly, probably a department a lot of the country doesn't think about on a day-to-day basis, but it's not – it doesn't sound like it's being run the way people would like it to be run. You know, I've thought a lot about this. A lot of these problems go back to the mid-2000s and in through the Obama administration when there was a lot happening. Congress was creating a lot of these programs. Public service loan forgiveness came out in 2007. And what you have is Congress creates these programs and they put all sorts of really rigorous rules around them that make it very hard to follow.

And then the Ed Department has to come in and sort of make sense of it, not only to borrowers, but to the loan servicers who have to work with borrowers. And like, if I can reduce my beat over the last couple of years to one sentence, it's taking all these programs that in my mind are a promise, right? From Congress and the department to borrowers. Like there's nothing speculative about this. And these promises have been broken again and again and again for thousands of people. I'd love to think the department is slowly and painfully learning the lessons of this era. You know, when you make promises to borrowers, you're going to be held accountable. All right, well, we are going to leave it there for today.

Corey Turner, thanks for your reporting. Thanks for having me on. I'm Tamara Keith. I cover the White House. I'm Susan Davis. I cover Congress. And thank you for listening to the NPR Politics Podcast.