Skip to main content

US to forgive at least $108B in student debt in coming years

The federal government is on track to forgive at least $108 billion in student debt in coming years, according to a report that for the first time projects the full cost of plans that tie borrowers’ payments to their earnings.


The report, to be released on Wednesday by the Government Accountability Office, shows the Obama administration’s main strategy for helping student-loan borrowers is proving far more costly than previously thought. The report also presents a scathing review of the Education Department’s accounting methods, which have understated the costs of its various debt-relief plans by tens of billions of dollars.

Senate Budget Committee Chairman Mike Enzi (R., Wyo.) ordered the report last year amid a sharp increase in enrollment in income-driven repayment plans, which the Obama administration has heavily promoted to help borrowers avoid default. The most generous version caps a borrower’s monthly payment at 10 percent of discretionary income, which is defined as any earnings above 150 percent of the poverty level.

That formula typically reduces monthly payments of borrowers by hundreds of dollars. Any remaining balance is then forgiven after 10 or 20 years, depending on whether the borrower works in the public or private sector.
Congress approved the plans in the 1990s and 2000s, and President Barack Obama has used executive actions to extend the most-generous terms to millions of borrowers.

Enrollment in the plans has more than tripled in the past three years to 5.3 million borrowers as of June, or 24% of all former students who borrowed directly from the government and are now required to be making payments. They collectively owe $355 billion.

The GAO estimates that $137 billion of that figure won’t be repaid. Most of it—$108 billion—will be forgiven because of borrowers fulfilling their obligations under income-driven repayment plans. The $108 billion only covers loans made through the current school year, however. The overall sum could continue to grow alongside enrollment increase.

The other $29 billion will be written off because of disability or death, the GAO projects, the only other circumstances under which the government takes a loan off its books. The government can garnish wages and Social Security checks for those in default.

Supporters say the plans offer a lifeline to borrowers who are unemployed or earning little, while the Obama administration has credited the programs for leading to a reduction in the number of new graduates defaulting on their loans. Supporters also point out that under current law, any amount forgiven would be taxed as ordinary income for private-sector workers, limiting the benefits for individuals. Public-sector workers aren’t taxed on forgiveness.


Comments

Post a Comment

Popular posts from this blog

GHANA: NDC condemns NPP attack on members

The National Democratic Congress (NDC) has expressed dissatisfaction about the alleged unprovoked attacks on members of the Party, following the Electoral Commission’s declaration of the results of the 2016 Presidential Elections. “We have received several reports of unprovoked physical attacks on supporters of the National Democratic Congress (NDC), across the country,” a statement issued by the NDC National Organiser in Accra and copied to the Ghana News Agency said. “We wish to request the leadership of the New Patriotic Party (NPP) and President-elect Nana Akufo Addo to call on their supporters to desist from the attacks and contribute to building a more stable democracy. These attacks are nothing more than situations that can only create chaos should the attacked also decide to defend themselves. “While urging the Security Agencies to move in and protect life and property, we believe that our political parties must be interested in promoting political tolerance among...
Post a Comment
Read more

KATSINA: SSG APPOINTS ‘YAR’ADUA’ AS NEW CHIEF PRESS SECRETARY

The Secretary to the government of Katsina State, Dr. Mustapha  Mohammed Inuwa has approved the appointment of Alhaji Abdullahi Aliyu Yaradua as the new Chief Press Secretary of his office. Yar’adua holds a Diploma in Hausa Studies from Katsina Polytechnic; Higher Diploma in Mass Communication from Hassan Usman Katsina Polytechnic and a Diploma in Journalism from International Institute of Journalism (IIJ), Abuja. He also holds a Bachelor of Arts Degree in English from Al-Qalam University Katsina and a Masters Degree in English Literature from Bayero University, Kano. Before his appointment, Yar’adua was the Head of Political Unit of Katsina State Radio and  two terms Chairman of NUJ Katsina State Radio Chapel and the immediate past Secretary of the Katsina state Council of the NUJ.  Credit: Katsinapost
Post a Comment
Read more

Homosexuality: One Auwalu Yusuf in prison for raping 2 boys in KANKARA

A Katsina magistrate court has remanded one Auwalu Yusuf, 25, of Maddobal village in Kankara town for allegedly sodomizing  two teenagers aged between 12-14 years. Yusuf, who was apprehended and handed over to the police by vigilante officers at the community, was charged with unnatural offence contrary to Section 284 of the Penal Code. According to the Police First Information Report read at the court, the accused criminally entised the victims with his money by taking them to Pole Wire side at Dandutse Quarters and individually sodomised them. The prosecutor, Inspector Kabir Mohammed, told the court that the victims reported the matter to their elder brother who in turn reported the matter to the vigilante, adding that upon interrogation, the said Auwal Yusuf confessed to have committed the act. The presiding magistrate, Fadila Dikko, remanded the accused and adjourned t he case to February 23, saying that it was brought for mention only as the court has no jurisdicti...
Post a Comment
Read more