[MUSIC]

Brian Lehrer: Brian Lehrer on WNYC. By the way, one tiny addendum to the last conversation we were having with Liz Kim and the mayor riding the subways. Listener texts, "I would prefer to see all the upper management of the MTA riding the subway on a daily basis." We hear you and that's another show.

On Monday, President Joe Biden announced a new student loan forgiveness program that he says could benefit 30 million borrowers. Relief may be on the way for people in a number of categories, so listen up if you think this might apply to you or someone you know. If you owe more money than the amount of your initial loan because of unpaid interest, you can have up to $20,000 automatically forgiven. If you've been paying your student loans back for 20 years or more, and you know we've had callers who say 20 years or more, it's shocking to people who have not been in that position, you could have some or all of that money cancelled.

You'd be forgiven for having whiplash from 2023 when the Supreme Court struck down the Biden administration's last attempt at a student debt overhaul, but this plan has a few key differences that the president hopes will stand up in court. We'll unpack the details of the plan, some of the ways the Biden administration hopes to insulate it from the legal attacks that the last one faced. Joining us now is Danielle Douglas-Gabriel, national higher education reporter at The Washington Post. Hey, Danielle. Welcome back to WNYC. Always good to have you on.

Danielle Douglas-Gabriel: Thanks for having me back.

Brian Lehrer: Biden, by way of background, had previously announced a $400 billion overhaul of the student debt relief program back in 2022, but the Supreme Court did strike it down. I'll ask you in a minute how this new plan differs from the old, but first, let's work our way through the main details of this new plan. You report that relief may be on the way for borrowers who owe more than the amount of their initial loan because of interest accrued. Why that category?

Danielle Douglas-Gabriel: Well, I think that category is particularly significant because it captures a lot of federal student loan borrowers. Roughly 25 million people could benefit from it. What's fascinating is while this regulation because this time around, it is a regulation instead of an executive order, the regulation in full doesn't go into effect until next summer, this component of it, however, would go into effect in the fall, and it could be pretty significant for the vast majority of federal student loan borrowers. By the White House's estimates, they think, about 23 million people could actually have all of their unpaid interest completely forgiven, 25 million would benefit in total, but 23 million in particular would have all of their unpaid interest forgiven. One time, though. Just one time.

Brian Lehrer: One time up to $20,000 in accrued interest. Borrowers could get all of their interest wiped away, I see, if they're enrolled in an income-driven repayment plan and have an annual income under $120,000 for an individual, or under $240,000 for couples. People would have to check those details. Another 2 million borrowers could automatically have their loans cancelled because they're eligible for existing forgiveness programs such as the Public Service Loan Forgiveness, but they never applied or the program wasn't ramped up enough. I think we have a lot of people like that in our listening audience working in the nonprofit sector. Could you remind people what the Public Service Loan Forgiveness program is?

Danielle Douglas-Gabriel: Sure. This was a program created in 2007 under the Bush administration. What it pretty much does is tries to encourage more college graduates to go into public service such as social work, teaching, police officers, firefighters. All of those folks are eligible as well as people who work for certain nonprofits. If you stay in that job or within that field for 10 years, and make on-time payments on your loans during that time, after 120 qualifying payments and 10 years of service, whatever your balance is would be forgiven.

The program hasn't always worked as intended. It was really complicated. People got trapped in the minutiae of it all, and weren't getting the relief that they needed. We saw the Biden administration a couple of years ago create this waiver that really relaxed the rules to allow more people to benefit from it. Since then, you have seen hundreds of thousands of people getting their student loans forgiven under this program, but yet there are still people who are eligible based on their service and their on-time payments, but never applied. I actually have met borrowers in this situation. One woman I know worked for a public school system for 14 years, had made payments on her loans, but never applied for the program. Someone like her would benefit from this.

Brian Lehrer: Yes. Well, maybe you've reported on whether that program is effective at its social goals. I personally have a friend who's a lawyer, less than 10 years out of law school, working in a kind of public service law job, not getting paid very much. I don't think this person happens to want to go into corporate law anyway, but says, "I'm probably going to stick with this for 10 years because I have all these student loans from law school, and I'm going to get them forgiven, and then I'll figure myself out in terms of the next phase of my career." Maybe it's actually serving a social purposes, as well.

Danielle Douglas-Gabriel: Certainly. You definitely see, particularly in the legal profession because the student debt burden is so high and so significant, lots of folks going into public interest law in order to take advantage of this. On the flip end, lots of conservatives and Republicans are not in love with that component of it because they feel like it's a backdoor subsidy for graduate school, and that is not what they want the student loan system to be doing.

Brian Lehrer: All right. Next point of President Biden's new proposed student loan forgiveness program, this proposed plan would also automatically cancel the loans of people who have been in repayment on undergraduate loans for at least 20 years and graduate school loans for 25 years or more. It's unbelievable. There are a lot of people like that?

Danielle Douglas-Gabriel: There are. Millions actually, and for a couple of reasons. There was a point in time, I think, in the mid-2000s or so, where you could consolidate your loans and get an interest rate of 2%, 1%, 3%. For a lot of folks, they stretched out the lifetime of their loan as a result of that, but they had this fantastic interest rate that allowed people to save for retirement, to purchase homes because they didn't feel the full extent of the burden of their student loans. I have met people and interviewed folks who are in their 50s or 60s who have these low-interest loans that they've been paying off for 20 or so years, and they're not as worried about it because the interest is so low, but certainly it would be great for them not to have to worry about this burden, especially as they are nearing retirement age.

Brian Lehrer: Category four out of the five. It would also forgive the debt of borrowers who attended career training programs that led to high debt loads or low earnings. What's the distinction there, I guess, versus a four-year undergraduate degree?

Danielle Douglas-Gabriel: I think this is the administration trying to get at some of those really low-quality, for-profit programs that saddled students with a lot of debt and very low earning potential after graduation. I'm curious to see how exactly this will flesh out. I want to make sure that we are clear that all of the terms of this particular proposal have not been published yet. The department is still finalizing a draft rule that's due out in the coming months. It'll be interesting how they make the distinction of who would qualify for this particular category.

Brian Lehrer: I see. That could be career training instead of traditional college or after college is what I think I hear you saying.

Danielle Douglas-Gabriel: It could be. It could certainly also be like beauty schools. It could be auto mechanic type of training. It could be anything that is along that track, but we haven't seen all of the details of how they're going to define that yet.

Brian Lehrer: Again, listeners, we'll be talking about the increasing popularity of those kinds of vocational training programs among Gen Z in America on tomorrow's show. Finally, category five, borrowers would receive debt relief if they are facing hardships such as high medical debt or childcare expenses that prevent them from repaying their student loans. There's a lot of individual assessment that would go along with that, right?

Danielle Douglas-Gabriel: Yes. This is another one where I really am curious to see what the terms of this will be because it's kind of nebulous in hardship. That's, in some ways, a bit subjective. During the negotiated rulemaking process, which is the regulatory body that comes together to try to hammer out these sorts of regulations, there was a lot of discussion about maybe they should consider people who have a higher probability of defaulting on their loans because of their payment history and such. I think there's a lot that will go into how we define hardship, which makes the final draft rule or the draft rule so much more important, especially since the public gets to comment on whether they think they the department should increase or change its definition to reach more people.

Brian Lehrer: Listeners, we can take a few phone calls with your reactions, especially your personal stories if you fit into any of these five categories that the President laid out that he's going to try to forgive student loans for. 212-433-WNYC, 212-433-9692, call or text with Danielle Douglas-Gabriel, national higher education reporter for the Washington Post.

Text message says that "Fox News is emphasizing that portions of Biden's debt relief handout are given without regard to income." Is part of it that?

Danielle Douglas-Gabriel: Yes. The interest part. Up to $20,000 done without regard to income, but the entirety of the unpaid interest on your loans, that is the portion that would depend on whether you hit that 120 or the, I think, 240 for couples. They are correct in that.

Brian Lehrer: Fox News loves the idea so much of the government giving money to poor people based on need. Why would Biden do that? Why wouldn't he establish an income threshold? If somebody is making $500,000 a year, but has $20,000 plus in accrued interest, why would that person be eligible?

Danielle Douglas-Gabriel: I really think the administration is trying to make this as expansive as possible, but in a targeted way. Attacking the interest, while it is a significant achievement, doesn't attack the principal. For a lot of people, especially higher earners, who may have graduate debt, their overall balance is still pretty significant. Especially if you are talking, you have $20,000 of unpaid interest, it is pretty likely that you owe a fair amount of money. I feel like they were trying to tow the line of wanting to be expansive in this vision for debt relief, but also not wanting to be too generous for people who in their mind could probably pay this back.

Brian Lehrer: Maurice in White Plains, you're on WNYC. Hi, Maurice. You have a story?

Maurice: Yes. Thank you, Brian. I love the show. I listen all the time for many, many decades.

Brian Lehrer: Great. Thank you.

Maurice: I fit into exactly the category that your guest was just talking about. I was 38 years old, I graduated with a master's in social work. I couldn't afford the payments, so Citibank said, "Well, we'll consolidate this for you, and then you don't have to worry about it for a while." The whole deal explained to me sounded good. I just signed all the papers only to realize they now owned the loan. When I called to say that I've been doing social work with families and children in New York City, low income for decades, for five years, for 10 years, for 15 years, they were like, "No, because we own the loans and we're not going to forgive them."

Then they sold them to Freddie Mac and Fannie Mae. Until the UFT stepped in and hired a team of lawyers that worked with-- In Biden's first year, he and Kamala Harris had a year window where finally mine might be eligible after decades of trying. Now I was 58 years old, and owed $60,000, and it wasn't touching any of the interest. Then I got it completely forgiven a couple of years ago in that window with those parties involved. It was-

Brian Lehrer: Maurice--

Maurice: -a nightmare and I didn't want to take this into retirement.

Brian Lehrer: Thank you for calling. I don't know if you know, Danielle, whether stories like that are really unusual or whether stories like that would be included in these categories of student loan forgiveness.

Danielle Douglas-Gabriel: Well, I do want to say, I think the caller raised a really important point. A lot of private lenders have been pushing their refinancing option for federal student loans to lower the interest rates because in some cases, particularly in graduate loans, the interest rate is pretty significant. It could be anywhere from 6%, to 7%, to 8% depending on the year and how it's set.

When you do those consolidations and those refinances, you lose all those federal benefits. That kicks you out of contention for public service loan forgiveness. It's great to hear that the borrower was able to find a way to benefit. I think that's an important part of thinking about your repayment and how your choices of trying to lower your interest rate might affect your overall ability to get some kind of loan forgiveness, particularly if you're a public servant.

Brian Lehrer: Let's see. Diane in Harlem has a story. A few people are calling in with stories like this in a category that I think we haven't mentioned yet. Diane, you're on WNYC. Hi.

Diane: Hello, Brian. This is a third-time caller and daily listener. I just wanted the representative to address the plight of parents who took a Parent PLUS Loan out years ago when it was under Fannie Mae. It was pretty high interest rates. I've done that and I've been paying that amount--

Brian Lehrer: Does this mean you took the loan out for your child who was the student?

Diane: Yes, but they also had their own loan. They had their own student loans they are paying back. The Parent PLUS Loan was something in addition that I took out. The rate was pretty high. Then when the second child came along, I took out an additional Parent PLUS Loan. Could I say that the financial aid office at these institutions encouraged this particular kind of loan? I wasn't able to consolidate it for a lower interest rate, and I'm retired now and I am still paying back this loan. I was just wondering if there is any provision for the Parent PLUS Loan. I can't be the only one out here. Thank you.

Brian Lehrer: Thank you, Diane, and keep calling us. Danielle, do you know?

Danielle Douglas-Gabriel: Certainly, I haven't seen anything that would exclude Parent PLUS Loans from any of these categories, so I think that's important to note. Particularly for parents who have been paying for decades, to my knowledge, unless the department changes it, it's mine in the draft rule that's coming out, they could benefit from the automatic cancellation after 20, 25 years.

I could see them benefiting from other categories, including the interest category, definitely. I think the caller raises an important point. People often forget that there are a lot of parents who have this debt and unfortunately carry it into retirement. Just like graduate loans, Parent PLUS Loans carry pretty high interest rates, 6%, 7% at times, and there are not as many loan forgiveness programs that are afforded to parents the way they are afforded to students.

Brian Lehrer: We're going to take one more caller story. You mentioned earlier, Danielle, people who would qualify for the public service loan forgiveness program if they worked in certain public service jobs, but never knew about it or never applied for it. I think we have somebody like that on the phone now. Ellen in Cortland, New York, you're on WNYC. Hi, Ellen.

Ellen: Hi. I have been paying off a student loan since 1998. I'm 67. I'm retired now. I spent my career in public education as a social worker. Also, I should say I consolidated to Navient. I've received letters from them saying I could convert the loan back to the federal system and probably be eligible, but no one can tell me whether I'm eligible in retirement or if I have to still be working.

Brian Lehrer: Wow. Danielle, I don't know if you can answer the specific question, but it occurs to us here, if she was a public school teacher for 25 years, shouldn't her loan amount be zeroed out because she worked in public service job?

Danielle Douglas-Gabriel: Under that one-year waiver that the Biden administration did, then she would have qualified because it was retroactive. Unfortunately, the waiver is over, but there still may be an opportunity. Again, the terms of this draft rule are really significant to see whether or not they tend to apply it retroactively. What I would suggest for the caller to do is, yes, the consolidation option to convert it back into a federally held loan is still available to her.

The department is still engaging in something called an income-driven repayment adjustment, whereby they're looking at people who have been in the system past 20 or 25 years and seeing whether or not they can give them credit towards forgiveness or erase their debt altogether. If you have a commercial FFEL loan, this is the old bank-based loan that are now held by private lenders, these were federal loans that were made by private lenders, a lot of people still have them, I think about 4 million at this stage, you can consolidate in order to go back into the direct loan program and potentially take advantage of that adjustment.

Brian Lehrer: Well, I'll just note politically, so much of the analysis is about this being proposed now by Biden to tilt toward voters in their 20s and 30s during the election campaign, but what we've learned on the phones is, if we didn't know, is that even a lot of people who identify in their 50s and 60s as those last few callers did, have student loan issues. This is a big, big, big thing in the United States.

In our last minute, because you are a higher education reporter, not a lawyer or a legal analyst, why does Biden hope that this will withstand a challenge at the Supreme Court as his last student loan forgiveness program did not?

Danielle Douglas-Gabriel: This is under a totally different authority, actually, the traditional authority that all the other loan forgiveness programs come from that is known as the Higher Education Act of 1965. This is the law that has governed how higher education moves from the financing to all of those kinds of intricacies. From what I've been told from folks who are lawyers, this is a lot stronger in terms of the legality of it, compared to the previous plan which relied on an emergencies power that was used during 9/11 for soldiers and such. This is different.

The other thing that makes it different is that the Department of Education went through a negotiated rulemaking to create a regulation which gives it also far more solid footing than the previous executive action. What that means is that the rule will go into effect next summer in its entirety regardless of who wins this election. It is entirely possible that the Trump administration could choose not to enforce it. They could also choose to try to rescind it, but by then the majority of what this rule encapsulates or what it does for borrowers would have already taken effect. I think that's important to note.

Brian Lehrer: If it does get challenged in court, we will do a legal analysis segment on the new Biden student loan forgiveness program. Danielle Douglas-Gabriel is national higher education reporter at The Washington Post. Thanks so much. We always appreciate it when you come on the show.

Danielle Douglas-Gabriel: Thank you.

Copyright © 2024 New York Public Radio. All rights reserved. Visit our website terms of use at www.wnyc.org for further information.

New York Public Radio transcripts are created on a rush deadline, often by contractors. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of New York Public Radio’s programming is the audio record.