okay.
The president finishing those remarks making good on a campaign
promise saying he will cancel between $30,000 worth of student
loan debt for americans earning less than 100 and $25,000
a year for families earning less than $250,000 a year.
While also extending the pandemic era pause on
loan payments one final time until the end
of the year
I do want to bring back will Seeley co founder and Ceo of Summer,
a digital student loan consulting firm and a former student
loan policy expert at the Consumer Financial Protection Bureau.
Will, what's your reaction to the President's announcement?
I think this is incredibly big news today.
This is arguably the biggest news in the student loan space over the last decade.
This is going to help tens of millions of people.
The president himself said approximately 20 million people
will be eligible for some form of cancelation.
This is more debt,
that's that's going to be canceled than any other initiative
the present has taken in this administration or previous administrations.
So we are particularly excited myself as a student loan
borrower though I am not eligible to receive cancelation.
I can tell you the hundreds of thousands of borrowers we work
with at summer are going to be incredibly thrilled by this news.
This is going to help a lot of people in need.
Um the biggest announcement in the past decade
when it comes to student loans and forgiveness will
certainly historic moment there.
I think a lot of people very happy about this millions of americans.
In fact,
I believe according to the president will
actually be impacted by this very announcement,
a few details.
I think still unclear when they can apply for the relief,
how they actually apply for that,
any sort of insight into that as to how that might go.
So I previously worked in D. C.
In student loan policy and so I've been in touch with
a few of my former colleagues just enquiring about what's coming.
What's ahead?
The party line right now is there's a lot
of unknowns they're still trying to work through.
But the General Consensus is it's going to be
at least a month or two before the administration gets
out any application for borrowers who meet the eligibility
requirements to apply to be able to receive cancelation.
So recognize there are over 43 million student loan borrowers.
The department of education
is going to be inundated
managing a lot of logistics across all of these different borrowers.
They outsource a lot of the consumer facing touchpoints to about nine
or so companies that manage those interactions known as loan servicers,
they're going have to coordinate across all
of those different entities this new initiative
and make sure that it's pulled off as smoothly as possible.
So I don't envy the operation
and challenges ahead.
But I would anticipate if you are a borrower listening to this
and you fall within the eligibility requirements.
Don't anticipate on getting an update for at least another few weeks
specifically to be able to apply,
but after then you should be able to receive information either from
the Department of Education or federal student Aid with guidance on how
to be able to get the cancelation you are looking for.
As we mentioned,
will I think millions of americans very happy with this announcement.
Even as we await those logistical details that
are still set to come the president before laying
out what all this announcement entailed saying that the
announcement was to try to fix the system,
these three major actions that the president
is taking. But what does this mean for students in college right now?
Do they feel like the system is getting fixed if this doesn't actually apply to them?
Yeah, I think there's two ways to look at this.
So first off, if you're in college today, I will say um it's very possible.
This is a one time announcement, a one off.
I don't see this becoming a rolling initiative.
It doesn't look like this is going to be $10,000 of cancelation over the next decade,
it looks like they're gonna try to do this as
quickly as possible for the borrowers who are eligible today.
So if you're in college,
I wouldn't go ahead and borrow more money just because you
think this is going to become a routine cancelation event.
I think that would, that would not be a smart move.
Um but I do want to highlight the
third initiative that the president spoke about today,
which is the 5% discretionary income cap,
which is part of the income driven repayment program.
There are a number of programs that previous administrations both conserve
Uh and liberal presidents have initiated uh-income driven repayment plans.
The most favorable to date has been the pay as you earn plan created by President
Obama that caps income at 10% of discretionary
of your discretionary income and caps your payments.
And so we were seeing over the last few years,
we've enrolled Thousands and thousands of borrowers into this program at summer,
which is a play on words to sum it up for student loan borrowers.
And what we've seen is it saves borrowers $300 on average, that's per month.
That's close to $4,000 per year.
The president today just said that they're going to
reduce the 10% of discretionary income cap to 5%.
That 5% is half as much of course and will be a massive
boon for student loan borrowers who are struggling to make their monthly payments.
It could mean several $100 even more in a monthly payment reduction.
And it's early,
but we're finding out details that there might
be any interest that could accrue during that time
would be covered by the federal government,
which is unlike any income driven program
in existence today. So this is
not to be understated and per your question
about college students today,
if they are worried about making their monthly payments when
it is the riskiest time to do so when you have
the highest debt load coming out of college and the lowest
monthly payment or earnings at the beginning of your career,
this new program that the president announced today,
an income driven plan could be a really great help for you
when you're just trying to get on your feet after you've graduated.
Will Seeley such a great breakdown. Such great insight.
Thank you again, was the co founder and Ceo of Summer,
a digital student loan consulting firm
and a former C. F. P. B. Student loan policy expert.