%1

Nearly $10 billion in student loan debt has been wiped away since President Biden took office, the most sweeping attempt to fix badly broken parts of the federal student loan system in at least a decade, the New York Times reported. The beneficiaries include permanently disabled people, those who were defrauded by failed for-profit schools and soldiers deployed to war zones. More than 500,000 borrowers had their loans erased this year, largely through aid programs that all but stopped functioning during the Trump administration. While Mr. Biden has so far fended off calls for the kind of blanket debt cancellation that is a top priority of many progressive lawmakers, a parade of relatively modest eligibility and relief enhancements adds up to a significant expansion of support for beleaguered borrowers. And more may be coming: The Education Department said it was planning regulatory changes to programs aimed at helping public servants and those on income-driven repayment plans. “We’re at an inflection point,” said Seth Frotman, a former student loan ombudsman for the Consumer Financial Protection Bureau who now runs the nonprofit Student Borrower Protection Center. “If we continue to see progress and the Biden administration builds on this, the government can actually fulfill its promises to borrowers and ensure that payment plans don’t become long-term debt traps.” Read more. 

In related news teachers returning to classrooms for another year of pandemic disruptions are facing additional stress in the U.S: overwhelming debt, Bloomberg News reported. Come February, an estimated one in four of the country’s 8.1 million educators will start making payments on their roughly $105 billion in outstanding student loans again after a moratorium ends. The burden is the heaviest for young teachers and Black teachers, who take on significantly more debt than other race groups. Add to that a federal loan forgiveness program rife with problems — only 2% of applicants were approved this year — and, in July, the news that the program’s only qualified loan servicer wouldn’t renew its contract. The stage is set for a grim start of 2022 for teachers trying to dig themselves out of a financial hole. “Setting aside the fact that some individuals might not be financially capable to return to repaying their loans, there’s big concerns that the administrative systems won’t be able to handle it,” said Lesley Turner, associate professor of economics at Vanderbilt University. The financial strife may accelerate turnover in an industry that was facing decreasing salaries and ballooning costs to get a degree even before COVID-19 brought crushing new pressures on the profession. Outstanding balances for teachers from pre-kindergarten to college education average $58,700, according to a July report from the National Education Association. (That’s close to the annual salary of the average teacher). More than one in eight owe more than $105,000, NEA data show, jeopardizing their ability to build up savings. Read more.

Don't miss the "Degrees of Freedom: Proposals for Student Loan Dischargeability" abiLIVE webinar on September 28. Register for FREE!