NO! As a taxpayer I don't want to pay off your f-cking student loan. Not my problem.
Do I ask you to pay off my McLaren 765LT? Exactly!
They Thought They Were Nearly Done With Student Loans, but Then Came Trump
A signature piece of Biden’s effort to reduce the $1.6 trillion student-loan burden is in limbo, hitting public-service workers especially
By Oyin Adedoyin, WSJ
Dec. 23, 2024 9:00 am ET
Stacy Eck had July 15 of this year marked on her calendar. It was the day she would have made enough student-loan payments to get $100,000 of remaining payments wiped out.
A few days after she made what she thought was the final payment, she learned forgiveness wasn’t happening.
On July 18, a federal appeals court halted the Saving on a Valuable Education Plan, or SAVE, which had enrolled some eight million people, including Eck. For borrowers promised a lighter burden on their $1.6 trillion in debt by President Biden’s White House, SAVE’s state of limbo suggests their loans will follow them well into the next administration.
President-elect Donald Trump isn’t expected to defend the program or continue most other Biden loan initiatives.
The threat to SAVE was a particular blow for borrowers like Eck, a school counselor in Mishawaka, Ind., who are also part of an overlapping program to forgive debt for public-service workers. They stood to have their remaining loan balances cleared if they made 120 qualifying payments, typically equating to a decade of service. By the time SAVE was halted, 118 of Eck’s payments had been approved.
“It was like a punch to the gut,” said Eck, age 40.
Borrowers say they are spending hours on the phone with student-loan servicers, who are giving them confusing and sometimes misleading information. They have taken to Facebook groups and Reddit threads to crowdsource information and ask for advice. Some feel they can’t leave their jobs, lest they no longer qualify for forgiveness. Others are hesitant to shell out for home renovations or vacations.
“Right now I just feel stuck,” said Amber Leonard, a 36-year-old analyst for a health agency in South Carolina. She was six payments away from public-service loan forgiveness when the SAVE program halted.
Once her loans were forgiven, she had planned to get a new car to replace the used Ford she had bought from a neighbor, and start helping her husband pay off his roughly $5,000 in private student loans. The pair also wanted to start a college fund for their 13-year-old daughter.
Forgiveness optimism
For the moment, SAVE borrowers are frozen in place. They don’t have to make payments and don’t accrue interest until the lawsuit concludes. But they also can’t make progress toward forgiveness. Many were on the cusp of having their loans wiped out when the program got held up in court.
Eck has been paying off her student loans since 2010, when she first became a teacher, a profession she dreamed of since kindergarten. At first, she made around $30,000 a year. She would sob in her classroom after school because her loan payments were as high as her mortgage.
She was in a loan-forgiveness program for public-service workers. She enrolled in an income-driven repayment plan, which reduces payments for people with lower incomes.
The Biden administration rolled out SAVE last year after courts overturned a bigger forgiveness plan. Eck switched into it because of the promise that it would reduce her monthly payments further. The White House said the plan would cut many borrowers’ monthly payments to zero, and save the typical borrower around $1,000 a year.
Stacy Eck switched into SAVE because of the promise that it would reduce her monthly payments.
Stacy Eck switched into SAVE because of the promise that it would reduce her monthly payments.
SAVE was part of a Biden administration priority to ease the burden of student loans, including for public-service workers who had previously struggled to qualify for forgiveness programs. The administration said its efforts to improve the public-service loan-forgiveness program led to loan forgiveness for more than a million borrowers working in public service, versus 7,000 before Biden took office. On Friday, the White House said it had approved relief for another nearly 55,000 public-service workers.
Eck said she grew nervous as the presidential election approached, thinking a new president could backtrack on loan forgiveness. “Closing this chapter before the election was something I just wanted so deeply,” she said.
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SAVE was challenged earlier this year by a handful of Republican-led states that say the program is illegal and costly. Then, in July, the administrative stay put most of SAVE on hold while the court considers the case.
The Trump administration isn’t likely to defend SAVE, analysts say, increasing the likelihood the court strikes it down. A spokeswoman for Trump didn’t respond to requests for comment. Trump has been critical of Biden’s student-loan forgiveness efforts, calling them “a total catastrophe.”
More than 14,000 complaints about student loans were submitted to the Consumer Financial Protection Bureau, the government’s consumer watchdog group, this academic year. That is roughly double the number from the year prior. At least some of the rise stems from the SAVE litigation, the CFPB said.
Public-service workers who were close to forgiveness before the injunction now have two options. Those with 120 months of eligible employment, but fewer than 120 eligible loan payments, may be able to “buy back” credit toward forgiveness. Some borrowers have to be willing to make an extra payment to cover the months they have left. The other option is to enroll in a different income-driven repayment plan, which may require higher monthly payments.
Eck submitted a buyback request to the Education Department this month but says she hasn’t gotten word yet whether it is approved.
Because of the legal challenges, the department said Wednesday it reopened two older income-driven repayment plans. She has applied to switch to another income-driven repayment plan, even though it might mean her payments go up, she said.
At school, Eck is working with her students on college applications right now. She wants to encourage them, but doesn’t want them to end up with the same student-loan burden.
“When I’m looking at this 17-year-old in front of me,” she says, “I think ‘I don’t want them to be 40-year-old me.’”
Write to Oyin Adedoyin at oyin.adedoyin@wsj.com
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Appeared in the December 26, 2024, print edition as 'They Were Nearly Done With Their Student Loans, but Then Came Trump'.
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