“It’s all in your head!” a conversation between Kurt and Lizzy, the day after the first IDR do-over
The bad news for Kurt was that the Education Department had just recently announced the first round of reviews and said they would wipe out the loans of more than 400,000 people like him. He had only to wait seven more months.
After Kurt hangs up, his wife, Lizzy, grabs a small, twist-top bottle of bubbly from the fridge, and they toast the email that says Kurt’s loans will soon be in his past — while his future sleeps quietly in the other room.
The email explained that Kurt can have his remaining $18,000 in loans forgiven because of the big IDR do-over.
Kurt can’t go back to sleep quickly because the woman is laying on his chest. So I check my email, and as soon as I saw the subject I thought, ‘Oh my God, this is it!'”
In the middle of November, Kurt woke up early with Pauline, who had a cold. He fed her, changed her diaper, and lay down on the couch with her, hoping she’d fall back asleep.
How Did Kurt Panton Pay Back Loans? When NPR Comes Around, Loan Forfrustration isn’t Enough
“I’m so close!” he laughed back. “When you were scrolling down on the spreadsheet, I was like, ‘Please get to 240, please.’ I saw 233. and I was like, ‘Nooo!'”
Kurt and I hopped on Zoom again in August. This time, the baby was about 10 months old and was sitting on his lap as I showed them the spreadsheet.
At the end of our chat, I asked Kurt to send me every record of every payment he’d ever made. The plan was to manually tally his payments, all 19 years’ worth, to see if he qualified for this other kind of relief.
Kurt Panton had been paying back loans for 19 years when we met. He could get loan forgiveness if he did not have to do this again. Technically, it’s true. But no one quite understood how or when this do-over would happen, and the U.S. Department of Education was still completely focused on the fate of Biden’s larger debt relief plan.
Two weeks after NPR released its investigation, the Biden administration promised to review the payment histories of millions of borrowers, find and fix the mistakes, and give them retroactive credit for IDR’s promise of loan forgiveness.
Even though advocates had been sounding the alarm about millions of borrowers who would have benefited from the repayment plans, they were never told about them or put into forbearance.
Long wait times for borrowers to call their servicers were reported by NPR in September, even before many borrowers began repayment. By late October the Education Department was blaming servicer errors, long call wait times and more than 50% of borrowers hanging up before getting through.
The IDR plans were supposed to help lower-income borrowers peg their monthly payments to their income so that they wouldn’t have to pay more each month. They were meant to be an engine of good and to keep struggling borrowers from defaulting on their loans.
But I was thinking of complicated formulas, because Kurt and I both knew Biden’s grand plan for debt relief was no sure thing. And I wondered if Kurt’s loans might qualify for another, lesser-understood form of debt relief that did not have to survive the courts.
Kurt Panton’s laugh: The frustration of the student loan-defense loophole and the government’s new FAFSA
I don’t need to think about whether or not I qualify under all these complicated formulas as long as he tells me that’s going to happen.
Kurt laughed a lot because he was worried about his loan debt, but he also told me that his debts had gone away a few days ago.
Kurt Panton is 43 years old. He grew up in Miami with his brother and their mother, Barbara. After graduating from college in 2003, Kurt taught high school until 2016, when he moved to Germany, married Lizzy, who is German, and tried his hand at copywriting.
Kurt Panton’s laugh, surprising and unguarded, erupts when you expect it — after his baby daughter, Pauline, babbles adorably. But also when you don’t — after he confesses frustration with the federal student loan system.
The department’s many high-stakes promises can’t be turned into functioning, concrete programs if they aren’t adequately staffed and funded.
According to the Education Department, there were not enough resources to implement the split as quickly as they wanted.
A bill passed by Congress and signed into law by President Biden allows former spouses to separate their loans after having consolidated them while they were married. The move was a big win for many women who left abusive relationships only to find themselves still tied to their abusers’ student loan debts. While the law achieved the impossible – squeezing through Congress’ partisan eye of the needle – it has stalled in the queue of big ideas the Education Department is trying to implement with finite staff and a grinding budget crisis.
Congress ordered the department to change the Free Application for Federal Student Aid. The form is released in October in order for students to know their financial aid options before they apply to colleges. But this new, overhauled FAFSA has been delayed until December. That’s not good news for families. In the rush to finish the redesign, there was a mistake that could mean less federal student aid for many students.
The debt relief plan didn’t finish as they wanted, but the Defenders of Biden’s plan still think it was a critical fight. Though it is also a reminder that, in government, pushing one new idea – especially an idea as big as debt relief – inevitably takes time and attention away from something else. The Education Department is juggling a lot of different things.
The department recently announced, of the 22 million borrowers with bills due in October, 60% made a payment by mid-November. These numbers are viewed by the Biden administration as a victory and they could have been much worse. But no one’s throwing a party, considering more than 8 million borrowers did not make a payment on-time and FSA’s running out of money.
Some members of the Biden administration feel that servicers are making messes of the changes and are hurting borrowers. But sources with the servicers, as well as a few within the administration itself, complain the Education Department is asking them to do the impossible, launching servicers from a catapult and telling them to build an airplane in mid-air, then shaming them when they fall.
Well, here we are, a year later, and the crisis has arrived. If Congress doesn’t agree to a funding solution, the Office of Federal Student Aid may have to give loan servicers another warning to scale back support for borrowers.
How to make sense of it all? As a correspondent who’s spent years covering the federal student loan system, my editors asked me to reflect on the year and share a few thoughts. I have three.
I began the year, back in January, with a story meant to sound an alarm: The federal agency overseeing the return to repayment, and responsible for implementing these seismic changes in policy, was facing the prospect of having to do it all with no extra funding.
These are the changes that have taken place. They may not result in immediate loan forgiveness, but they are absolutely meant to make for a kinder, gentler repayment system.
SAVE is not the only change the Biden administration made to repayment rules. The Fresh Start program is for student loan borrowers who are in the process of default. Fresh Start makes it easier for borrowers to improve their credit and gives them immediate access to the SAVE repayment plan – for many borrowers, a welcome alternative to the old days of forced collections and wage garnishment.
I teamed up with Planet Money’s Kenny Malone for a deep-dive episode into SAVE and what it will mean for borrowers in the long-run. You can hear it here.
The First Student Loan Forgiven by the U.S. Senate Education Commission: A Whale-like Example of a Pandemic Payment Pause
“America’s student loan system is broken,” said the Republican chair of the House Education Committee, Virginia Foxx of North Carolina, “and this reckless, inflationary, and illegal expansion of executive authority will all but ensure it’s doomed beyond repair.”
The plan exempts more of a borrower’s income from the monthly payment math than previous plans, and, under SAVE, interest no longer accumulates beyond what a borrower can afford to pay each month. Under previous plans, borrowers with low or $0 payments — too low to cover their monthly interest — saw that interest explode. SAVE stops that from happening.
In the largest sense, “student loan forgiveness” became a catch-all name for President Biden’s August 2022 proposal to erase up to $10,000 in federal student loan debt for most borrowers and up to $20,000 for Pell Grant recipients. And yes, that plan is dead. In a 6-3 decision, the Supreme Court ruled in June 2023 that the Biden administration did not have the authority under a 20 year-old federal law to forgive hundreds of billions of dollars of student debt.
For example: On July 14, an otherwise quiet, summer Friday two weeks after the Supreme Court declared Biden’s plan unconstitutional, the Biden administration announced it was nevertheless erasing $39 billion of debt for 804,000 borrowers.
The process of debt relief is long and muddy so it will feel smaller than Biden’s first proposal. But something will likely survive, at least until it faces a fresh round of conservative legal challenges.
He was, and he was not. The U.S. Education Department is now working slowly, using a different law (the Higher Education Act) and a bureaucratic process known as negotiated rulemaking, to explore what kind of legal authority the education secretary does have to cancel student debts.
He’d have plunged borrowers into the cold depths, bound to a white whale, to represent the disappointment of millions of Americans who spent the first half of the year hoping to be free of their student loans.
It was a year to remember with whale analogies aside. A year that will be studied for decades, as the inflection point between one unprecedented era – a pandemic payment pause punctuated by the U.S. Supreme Court’s scuttling of President Biden’s debt relief promises – and another – the rollout of sweeping new repayment policies just as millions of muddled borrowers return to a system hobbled by partisan bickering and budget cuts.
Many, perhaps most borrowers will tell you that 2023 was the year the idea of “student loan forgiveness” died atop the mahogany bench of the Supreme Court.
