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form the way americans pay for higher education. It's Friday august, twenty six stacy welcome back, I Natalie grey. to be here. So this is a real full circle kind of moment because The last time you were on the show in April, you describe president Biden dilemma when it came to student loans. Biden like before him allowed tens of millions of borrowers to stop making payments on their student loans in this policy that began during the pandemic, and you told us that there were some big questions that raised like. Would he just keep pausing those repay

indefinitely. Would he take some more dramatic action like cancelling student dead altogether and We have our answers. Yeah. This is a completely enormous change to the system So we have around forty five million people in this country with student bone that totalling one point, six trillion dollars. That's more than people on their auto loans on their credit cards on any other kind of consumer, that outside of mortgage rates As you told us, and as we know, this debt is really specific these low. are really saddling twentysomethings with a debt that follows them and shapes their decision making for years by when you think about it, people can take undergraduate draw loans for up to almost sixty thousand dollars. So you have people walking out of college young adults who oh, what you would

we think of as something more like the down payment for a house or a car. So for many people this is one of the very biggest monthly bills they faith in their life and what this action did. Is it's going to be to some level of debt forgiveness for probably around forty, million people. It looks like, and it's going to entirely wipe out the balances of around twenty million people. That's enormous. So in one swoop nearly half the people in the system are going to be taken out of it entirely. There's never been anything like this that happened before with the student loans system. Ok, so let's get into this new debt relief plan. What's in it, so this three fundamental provisions of this plan, the first and the sexiest that everyone's very excited about is this idea forgiving.

a whole chunk of debt and just wiping it out and getting rid of it. The second is saying that we're finally going to end this payment pause. That's been going on for the last two and a half years. The third piece- and this was the piece that was kind of surprising- that we didn't know was going to be in this. Is this idea of an entirely new payment plan for people going forward? That's aimed at making paying undergraduate loans in particular more affordable, got it so walk us through those three components, one by one. If you can starting with debt forgiveness, said the top by numbers here are that this plan will forgive us. ten thousand dollars in debt for any borrower who earns less than one hundred and twenty five. Dollars a year or has a household that are less than two hundred fifty in dollars a year, hmm, those are necessarily small,

income figures. Do we know why Biden take those cut off their? Not there? Definitely not small, and the intense here was really to capture. It looks like the broadest possible swath of the middle class. That's really what their aiming at Biden has been pretty clearly reluctant this. Marks on this to let this relief go to high earners? I think there's a wheel leering this around this idea. We're gonna, take taxpayer funds the bail out lawyers engineers and doctors and high earners, but there's also a recognition that there are fairly enormous, badly bells and that even a fairly well up household could really struggle with them. So the hundred and twenty five thousand

The number for an individual two hundred and fifty thousand for a household appears to have impact to hit a really broad section of borrowers. Most people are going to qualify for this while axing out the people who are truly in the highest income brackets in the country. The other piece of this, which is particularly interesting, is that pell grant recipients will be eligible for twice as much debt forgiveness. So if you were a pell grant recipient you're going it'd, be eligible to have up to twenty thousand dollars of debt wiped away here. And can you just remind us what a pell grant is sure those are grants that are aimed at students from the lowest income households? The vast majority of pell grant recipients come from households that have less than thirty thousand dollars in income they're, also by the way, a pretty significant chunk borrower population so about sixty percent of student loan borrowers are a pilgrim recipients and the education department is estimating

that this twenty thousand dollars and debt forgiveness will reach about twenty seven, million borrowers while so it sounds like the biggest relief here is going to those who have. least money and are the most in need. That seems to go back to what you said about finding a middle ground. That Biden has been trying to wipe out a lot of debt for those who are most hurting with their student loans, while avoiding giving a handout to the wealthiest americans, yes and this also goes to an issue that has been really part of the equation here. Around racial and economic justice, pell grant recipients are disproportionately black borrowers, people from communities of color, first generation college students and its clear that it was pretty important abiden to try to.

This part of his racial equity agenda, to try to aim this at communities of color that have traditionally been stuck with far higher student loans that burdens than white students got it. So, let's move onto that? Second part of the plan around restarting pain, and what do we need to know their starting january? First, these bills are going to be do again over the last two and a half years. People have gotten pretty used without having to pay them. Remember this started back in march twenty twenty, as a pandemic relief measure was intended to take this monthly bill off of people's plates. While we dealt with this economic crisis and its been extended over and over and over a sense, then- and there has been this- haze of uncertainty around when they were really going to pull the trigger and actually restart payments, and that's the message for getting here this week is january. First is the real day these bills are coming for you again,

Explain to me why, finally, having this date is so important, this is pretty critical for both borrowers and for the back end of the system. Borrowers have been getting these extensions and pay I have gotten comfortable with this idea that oh they keep delaying the state. I don't really need to pay this bill. This is intended to send the message that no really start adjusting your monthly budget you're going to have to pay bill again come january, it's also important for giving the government itself and the loan services at hires on its behalf to collect these bills time to ramp up. This is going to be a huge logistical undertaking to reach. start. The student loan collection machinery, millions and millions of people are going to be calling their own services and trying to get guidance on what their payment is, what they need them.

About it all of these things, that means that those loan services have to hire a lot of people have to put a lot of systems in place. So there's a lot of leg work that has to happen, and this is intended to give everyone involved some banality around. What the real deadline here is. Ok, so stacy talk me through the third part of this plan. The changes to house student loans will actually be repaid. What's by proposing there This was the most surprising piece of it cause. I don't think this was widely expected to come down the pike and it is a pretty major change that we're going to see playing out over the coming years. Under the current payments system, there is a whole hodgepodge of different ways. You can pay your loan, you can pay it on a ten year plan. You can pay it on a twenty year plan. You can also pay it on a plan. That's called an income driven plan where what you pay each month is tied directly to what you're earning what

and is proposing is an entirely new income driven plan that would have a few really beneficial features, including it would cap your monthly pay meant for an undergraduate loan at five percent of your discretionary income. That's about half of he would currently pay under the most generous income driven plan right now, under those plans are expected to pay up to ten percent. So just make sure I've got this by is trying to incentivize people to pay their loans by cutting in half the amount There are actually paying right and there's another major change is proposing here, which has to do with interest. What he is proposing is If you are making your monthly payments, the government will fully pay the

trust on your alone, so that your balance won't keep increasing. This is intended to address one of the biggest problems with the existing income driven payment plans where people make their monthly payments and still see their balance going up and up and up so this is, Basically, the government saying don't worry as long as you make your payments will make sure the trust in your loan is actually causing your debt to grow larger. Yes, there is also one other aspect of this kind of important flag under the existing plans. Whatever balance you have left after twenty years gets eliminated under this plan, and for people who originally borrowed twelve thousand dollars or less and make their payments for ten years balances would be eliminated at that point after ten years. Instead of having to wait twenty years, and that's again really intended to help people who have small balances. Often

waste income borrowers get out of this debt sooner so stacy when taken altogether. These changes to the income driven payment plan seem like binds best attempt trade at fixing problems, not just for current debt holders, but also for future borrowers. Absolutely this is the best effort he can do with the tools he's got at his disposal to reduce the likelihood that this problem be occur as because the last thing we want to see happen as we do this enormous debt forgiveness and then a whole bunch of boosted, the clock to school in september and the clock just start over again and this entire problem or currie, and so this is,

something of an attempt to try to reduce that. Am I right that when you put it all together with the other components here, the forgiveness of restarting of loan payments over all this plan is a big win for a lot of borrowers. for millions of individual people. This is going to be life, changing there was so much jubilation and celebration yesterday, my phone was blowing up with tax russia to your when I saw this earlier, does like iconic can truly like when was, I spoke to admire our who, when she heard the news said she literally started screaming, should stand in her joy, room, crying and shaky, and she was so excited about what this was going to mean for her future ceasar. Well, any I think that was the reaction. A lot of people had me

Just like a financial left. It even like a mental left duffel feels good year makes me happy how often we take what I can get they would you want about by and by he did it. This has been talk: about for so long that actually see that become real, I was really a shattering and happy moment for a lot of people, but there is also a flip side to this. Not everyone is thrilled about these changes will be right back. hi, I'm cardiff, garcia and I'm a host of new pod cast the next chapter by american express business class in each of us.

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and this piece is for space episode. I want to put the listener right into the deep darkness of space for this cute. The producers wanted us to write something that would evoke the late seventies. I started with a baseline, and then I added some drums to it. He said: can you like add twenty or thirty percent? More funk to this, we write music to highlight a moment to draw you into the story without telling you how to feel it's always the or to solve. So if you The daily and you want, is to keep making reflective cosmic, sometimes groovy, but always subtle music, for the show support us by subscribing to the new york times. Stacy use not everyone is happy about. This plan. Explain that well, as with any big sweeping plan, there's some criticism coming in from various wings

Hard to imagine a worse policy, a policy that solves few of our problems and harms much more people, certainly the republicans. I generally pretty unhappy about this work too, I've through college they'll pay my twitter. I went along, so it's not about maybe Just in general, people are very outraged. I think it's. The best word, taxpayers that pay their bills and maybe even never went to college, are just hard working people. They shouldn't have to pay off a great big student loan debt or some college student. What a lot of this boils down to is concerns over the cost of this people pay for the mirror ass there should be. The university should be responsible, because this is going to be a very expensive plan. How expensive the white house has released numbers yet, but the committee for responsible federal budget put at an estimate on thursday and they believe this is going to cost around five hundred billy.

In dollars. So a lot of money do we know how the administration plans to pay for this. So in this case, because this is that held on the education departments books there able to basically, wipe this out and eliminated, but obviously that means there is billions and billions of dollars that the governments not going to be bringing in their stipulate three things they can do to offset that loss. You raise taxes, you borrow more money or you cut your spending somewhere else. So, ultimately, one way or the other taxpayers are going to bear the brunt of this. There is also an interesting elements here of this debt forgiveness. The billions of dollars were binding, here, a good chunk of those borrowers whenever going to pay that money back actually before the pandemic. One in five student loan borrowers who had a payment to within the fault, show the unclear exactly how much the government would have gotten back from those borrowers anyway. Exactly

those borrowers were already not repaying. Those loans were probably never going to repay those loans so another thing that makes figuring out the actual true cost of this fairly tricky and there's another issue a play here, which is inflation and the possibility that this could make that worse rate. I remember when you were on the show back in the spring. You said: inflation was one of the biggest concerns around cancelling student loans that but remind me why the concern is that it could not paying you stood alone That gives you more money in your pocket to go, spend on other things and the whole issue we ve been having with inflation, is too much money chasing too few goods so that concern here is that by effectively putty more money and people's pockets, this can exacerbate that problem. The argument the white house is made is that look for the last two and a half years. People have been paying

bills. This is already the reality we're living in, so their belief is that by restarting the payments at the same time as they're doing this debt relief, those two things will basically offset each other and how sound is that logic coming out of the white house that this won't spur faster inflation? Well, we're going find out. There is certainly a lot of economists who have concerns about this. On the other hand, this is a very unusual form of stimulus. It's not like we're handing people checks. The white house is pretty convinced that perry in these two things restarting payments at the same time as you're doing this will make a kind of come out as a wash so it really remains to be seen how this is going to play out. So tell me about some of the other criticisms of this plan. Well, there's concerns about fairness. Why are we picking this particular group

people to deliver this enormous bundle of relief to the republican national committee described this, as Biden spell out for the wealthy there's concerns that this population is people who got the opportunity to go to college. Why should those who didn't and essentially subsidizing that's the flip side of that? Is that when you tell when the who the population of people who for college actually are. There is an awful lot of truly low income people in there. It's a really diverse group. That number we talked about four aware about: sixty percent of borrowers are pilgrim recipients. Who from from very low income families, so in that sense this be a way of really targeting some relief towards a population that is truly off in real need stiffly. I can also imagine, though, that for someone who worked really hard to pay off their massive student loans that bit by bit it

I feel unfair to then asked them to help foot the bill to cancel the debt for all these other people. Absolutely certainly someone who pay. Off their college loans in the past can look at this and say: ok wires this generation getting a handout. Why is this the political issue that we're going to put all this money into the reality here is why that's happening? Is that their has been this enormous grassroots mobile they around this and it has become a major political issue for a powerful constituency. This is issue that is overwhelmingly have concerned, a young voters, it's also in it.

isn't that a number of groups, as described as really critical for black voters and the politicians, had to respond to that. Yet I want to talk about the timing of this it's about two months before mid term elections that could determine who controls the house and the Senate and I'm sure for a lot of people. It's hard to not see this as a political ploy to benefit democrats in november and possibly beyond. So there is definitely a very a political reality that, yes, this is happening right ahead of a mid term election. This is kind of a rare or major public policy, move that hasn't a tangible and real and direct impact on people's lives. One of the challenges of a lot of the relief spent

in around the pandemic is that it was kind of invisible even to the people at helped. It was hard to see sort of how that was paying off this one's very direct and very clear, and that can be. The Democrats certainly hope it will be a very powerful motivational tool specifically for some constituencies. If the Democrats really want to reach? I do wonder, though stacey how sustainable this is. Am I right to think that the next president, a Republican baby could come in and reverse the sunday want. Well were certainly expecting some legal challenges here is so the timing of how this actually plays out and when this belief actually gets delivered to people is potentially in flux. One issue for any politics,

in opposing this is this is pretty broadly popular. I mean more than sixty percent of the american public supports some form of widespread debt cancellation. So I think it's going to be hard for someone to come in and say I'm going to take away. This benefit that you personally have been promised where we could see. Some changes is around things like this income driven payment plan, the bite and wants to roll out and make really widespread that something that a future administration could take a different approach on, especially because none of this really takes aim at the underlying structural issue here, which is the spiralling that burdens and the cost of college. It's not doing anything to really do

it's a deeper issue of college- just being so incredibly expensive and forcing people to take out those loans in the first place. Stacey was there any way that this plan could have addressed those concerns, that's really difficult to do without congress. That's part of why seen it being addressed in this way. Is this is what they could do unilaterally operating through the education departments, power to forgive debt? It's a much trickier problem to tackle the front end of this. That probably requires things like more spending on public education and that's the kind of thing guinea congress to do. But while these changes don't get at the underline structural issues directly, what binds really out here, changes something pretty fundamental about how people pay for higher education and what is the since two thousand ten? The government has been the direct lender for student loans and the region. It was done that way, as this has been a profit centre for the government, they

Money off the interest on student loans, but we're sort of changing the system from being something that has a money maker for the government to being something? the clear area of subsidy for the government. This really is a sort of fundamental change in the system and throws into sharp relief this political question that we're all going to have to grapple with about What is the government's responsibility and our responsibility as citizens to fund higher education, to treat this as something that we invest in as a civic, good, and I think that something that's going to be more of a focus area going forward as we start to really grapple with all of these changes. Stacy. Thank you. So much thanks. Natalie we'll be right back.

What we owe the future as a new book written by oxford philosopher, william mechanical it offers a guide to making the future go better for future generations, humanity's written history, spends only five thousand years. The yet unwritten future could asked for millions more or it could end tomorrow. You can find out more about how to give future generations a world full of joy. this hope and beauty by learning more about this new book at what we owe the future dot com. Here's what else you need to know today on thursday, a federal judge in Florida ordered that are adapted version of the affidavit used to obtain a search warrant from our logo be unsealed and me

available to the public by noon today its unclear how much the rejected document will reveal, but it will offer the most in depth. Look yet at the government's justification for searching president trumps Florida residents earlier this month and in russia. President Vladimir Putin ordered a major expansion of the nation's armed forces, calling for one hundred and thirty seven thousand additional active duty service members raising the total to over one million by january of twenty twenty three. It was the first time in five years that Putin had change the head count of the russian armed forces, a sign that, despite heavy battlefield losses, he is

funding for a long war in ukraine, today's episode was produced by nina feldman, robs zip code and move vander. Blue withheld Michael Simon Johnson. It was edited by anita body joe and mark george, contains original music by marian Lozano. engineered by chris would our theme, music is by timber, hamburg and then lansford of wonderingly, That's it for the daily I'm not going to throw us see monday.