V got to talk to the actual Secretary of Education about student loans – and we’ve got the exact notes on the 3-part effort to manage student debt. There’s a ton of misinformation, disinformation, wishes, hopes, and dreams out there right now – so we’re giving you only and exactly what is most true as of this moment. In today’s mini episode, V breaks down how to identify yourself to the Department of Education for forgiveness and how to re-apply for the public service loan forgiveness program, especially if you’ve been denied in the past. Plus, answers to your most pressing TikTok questions on when, how, and who pays for student debt forgiveness.
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V Spehar 01:46
Well, hello, and holy shit it happened Grandpa Joe came through with some ice cream money. By now you’ve heard that the Biden administration canceled $10,000 worth of federal student loan debt. You may be even heard that the student loan repayment pause has been extended for one final time through the end of the year. And maybe if you’re an extra good listener, you also heard that Pell Grant recipients will see their debt relief doubled to $20,000 and forgiveness. So we decided to do a special ice cream money edition of V INTERESTING, we’re still gonna get you our very spooky season episode with mortician and TikTok. Creator Eileen Hollis this weekend. So don’t worry, that’s not going anywhere. But let’s go back to student loans for a second because that debt forgiveness and that student loan pause that is just the tip of the iceberg, my friends. And how do I know? I was in the room. Yes, I was in the fucking room. Well, it was a Zoom. But it was a room that Joe Biden and the press secretary and the Secretary of Education we’re in. And first off, I don’t care who you are, or what politics you subscribe to, or like which president is your favorite. Being invited to do something with the White House with a sitting administration? It’s cool. And this was definitely cool. I mean, take any feelings you have about Joe out of it. It was cool. I got the call with like, absolutely no notice, as you guys know, I’m out here in Dallas at this podcast convention. I’m actually recording this from the closet. Yes, I got back in the closet to do this. And they were like, look, can you get on a call with the White House? Like in the next couple of minutes that I was like, Sure. I have a panel in an hour. And they were like, great. Fuck your panel. Who cares? Joe Biden wants to talk to you about student debt. Is it okay, great. So I almost missed the panel. It was fine. Everything’s okay. Here’s what happened after I stopped panicking and got to ask my questions on a call. So I got on the Zoom. Those folks were on it. There was a couple other creators there. And then afterwards, we were given notes that the White House used when building out the press conference. So I have with me right now the No bullshit. No. Well, I think this is what he means. Well, I think this is what I heard. No, fam. These are the OG notes. And I’m going to read you the most important parts right now. So we make sure that you get the most clear and accurate. What happened. I’m gonna go through how people reacted, I’m going to answer the top questions that came through on Tik Tok related to student debt forgiveness. This will be the all-encompassing student debt expert 101 class right here from this closet in Dallas. And then we’re going to close out with what this could all mean for folks that are affected and do a little future gazing because right now, people are having the opportunity to look at the future a little bit more favorably. And I think that that’s great. By the end of this minisode you will be the most educated and accurate person in your circle talking about the historic action of canceling some student debt. So here we go.
V Spehar 04:38
I think it’s going to be helpful to think of student debt management in three parts. We’re going to talk about debt relief, then loan repayment options, then protecting future borrowers. Okay, so first starting off providing targeted debt relief. Biden is providing up to $20,000 in debt cancellation to Pell Grant recipients and up to $10,000 in debt cancellation for non-Pell Grant recipient’s borrowers who earn less than $125,000 per year, and households earning less than $250,000 are eligible for debt cancellation. So if you’re like a single person, you filed your taxes last year single you made less than 125,000, you will qualify. If you’re married and you file jointly in your household made less than 250,000, you will also qualify that’s what that means. This applies to loans taken out before July 2022. So you can’t like take a new loan, this won’t be for future loans. It’s for stuff that already exists. Now, the good news and a lot of people had questions about this. It can be used on undergrad grad trade school loans, whatever it was, as long as it was a federal qualified loan for forgiveness. And thanks to the American rescue act, you will not be taxed for having this debt relieved. Okay, it’s not going to be taxed as income. I know, you’re probably seeing that on Twitter, that is just a lie. That is not true. Now, the other question that people had was, what does it mean up to 20,000 or up to 10,000. Basically, your relief is capped at the amount of your outstanding debt. So let’s say you’re eligible for 20,000 in debt relief, but you have a balance of 15,000 remaining, you only get the 15,000 relief, you don’t get like a check for the extra five. For nearly 8 million borrowers, this debt will be cleared automatically, because the Department of Education already has your income and Pell Grant or loan information in their system. But friends, do not assume that you are one of the 8 million that’s just gonna like have your debt canceled automatically don’t trust the government that much not yet. We just started to like maybe see some action from them, you need to go to student aid.gov/debtrelief, you will fill out a short form identifying yourself as someone who is eligible for loan forgiveness. That address again is student aid.gov/debtrelief. Now, yesterday when I posted the website, the site did crash, it is back online, don’t panic, it could crash again, you have some time, just go over there in the next couple of days to sign up for alerts and updates on the process of loan forgiveness, and especially to identify yourself for that forgiveness.
V Spehar 07:06
Now, while this is all working out, the federal student loan pause has been extended through the end of the year. This is the last time and I’m telling you when he said this is the last time it was like when your dad says this is the last time and you know for sure if it is actually the last time they’re not going to extend the student loan repayment pause again. So you’ll have through the end of the year, and then you’ll have to start repaying it back. 20 million people will have the remaining balance on their loans forgiven by this bill, which I think is pretty cool. Most of these folks have less than $10,000 remaining. Okay, but as noted, what happens to you if you have to start paying your loan again, is there anything for you in this bill? And the answer is yes, yes, there is. First up, they made big sweeping changes to income based repayment plans, which I was actually like pretty excited to see this because this has been a nightmare for me in the past. And I’m sure for many other people as well. Lower income based payments, the rate that you used to have to pay was 10% of what the government would consider your discretionary income, okay, you had to pay 10% of that to your student loan. So basically, like whatever money you had left over after rent, and food and your health insurance. Now, I don’t know who was deciding discretionary income before, but they were a terrible person. Because I would not consider things like, I don’t know, having enough money to buy water, or like go to the movies once a month. Discretionary income and student loans were like sucking up all of everybody’s money. So the rate is now down to just 5% of that discretionary income. What does that look like in real life. So a typical construction worker with a construction management credential making $38,000 a year will now pay $31 a month instead of $147. A typical public school teacher with an undergraduate degree making $44,000 a year will now pay $56 A month instead of $197. You see where this is going. And a typical nurse with a bachelor’s degree and making like $77,000 a year will now pay $61 a month toward their student loan instead of $295 a month. These are some life changing numbers. Low income folks will have unpaid monthly interest covered by the government so that no borrower’s loan balance will grow as long as they keep making their monthly payments. That’s great, because that fixes that issue of like runaway interest.
V Spehar 09:26
And if your balance is under 12,000, and you paid your loan faithfully for 10 years, they’ll forgive whatever debt is left. Now this used to be done but you had to pay your loan for 20 years. And I think by that point, people were like paying their loan plus exactly what they had taken out over again, it was completely a mess. I mean, the loan repayment thing you guys know, nightmare stuff. So I’m really glad to see that they fixed that up. Also, and I thought this was really nice too. If you make the equivalent of about $15 minimum wage for a single borrower, you will not have to make a monthly payment at all. It doesn’t mean that your loan goes away. It just means that the government understands that if you’re making 15 bucks an hour as a single person, you just simply do not have the money to pay your student loan. At this point, you will have to the government’s gonna have to wait to get paid until you’re getting paid. So that’s that. Now, for my teachers and my first responders and my nurses and my public servants, there are also changes to the Public Service Loan Forgiveness Program. borrowers who are employed with nonprofits, the military, or federal, state, tribal or local government may be eligible to have all of their student loans forgiven through the Public Service Loan Forgiveness Program. Now, this program used to have a 99% application denial rate, but Biden made big changes to this too. So you are much more likely to qualify, if you got denied in the past, please give it a try again. But if you are gonna give it a try it again, and I cannot stress this enough. You have to do it today; you have to do it now. You have only until October 31 of this year to reapply for consideration of the Public Service Loan Forgiveness Program, okay? It’s like this special reconsidering for like all the people, they’ve been screwing over all this time situation, get your application and go to pslf.gov right now, you have to apply by October 31. Don’t wait for Halloween. Do it now. Okay, so now we’ve put those things away. And if you have to go back and listen again, I listen to stuff like six and seven times. It’s complicated. We’re gonna line it all out. We’re gonna give you show notes for all these links. We’re going to take care of you. We’re holding hands through this. Next step, my future borrowers. What about the future? What about people who are considering taking out loans now? Okay. The Department of Education reestablished the Enforcement Unit at the Office of Federal Student Aid. Did you even know they had one of those? Yeah, they have one of those. So its purpose is to hold a creditors feet to the fire as it relates to predatory lending in the first place. The department just withdrew authorization for an accreditor that oversaw schools responsible for some of the worst for profit scandals. And you probably saw that like billions of dollars in student loans had been forgiven, because these people were duped into taking them out to go to for profit schools like ITT Tech where they completely over promise things to them. And there was no career trajectory, and it was all just a big scam. So that has all been put to bed by Biden, which I think is great, too.
V Spehar 12:16
This department is now also going to publish an annual Watch List of the programs with the worst debt levels in the country. They are just putting up a wall of shame, and I am here for the shade. So students registering for the next academic year can steer clear of programs with poor outcomes. Incredible. They will also request institutional improvement plans from the worst actors to outline how those colleges with the most concerning outcomes intend to bring down debt levels. And the agency will propose a rule to hold career programs accountable for leaving their graduates with mountains of debt that they cannot repay a rule that the Trump administration had repealed, which this is the crazy thing about the government. It’s like, I didn’t even know that happened. I mean, had you ever heard that happened? Look, the situation we’re in it is not good. And for many folks, the amount of the loan they took out, they have paid it back, they paid it back, they took out 70,000 They paid back 70,000 they still owe 50,000 That is not how this is supposed to work. And that’s because of the predatory interest. And the arbitrary rise in college costs, the recession, natural disasters, COVID people starting school and then not being able to finish school, all that kind of stuff, things just spiraled out of control to a truly absurd level, which is why these extreme measures and course corrections are coming now. Now as happy and excited as I am for like literally anything to be coming our way any little crumb, any little bone. Not everyone was thrilled of course right. And we knew that that was gonna be was gonna be coming. Republicans have accused Biden of using student debt relief as a quote, midterm, Hail Mary, and Vanity Fair had maybe the greatest clap back about the Republican establishments reaction to student loan forgiveness. So I’m just gonna read it to you straight because it was that good, suggesting that only elites attend university in grad school Rep. Jim Jordan, who has a bachelor’s, a masters and a law degree tweeted, student loan forgiveness will benefit the wealthy elites. Once again, Joe Biden forgets about real America. Senator Tom Cotton who likes to pretend he didn’t go to Harvard for both his undergrad and law school, and is just so in touch with the working man wrote, Biden owes Americans an explanation on why a truck driver who didn’t go to college is now responsible for the student loans of a rich lawyer. That is not true, by the way. Like we’ll get into that next. Senator Rick Scott last seen vacationing on a yacht in Italy wind that the plan is a burden on taxpayers and Mitch McConnell who has never met a corporation or a billionaire whose taxes he didn’t want to cut, called the move student loan socialism and quote, a slap in the face of working Americans who sacrificed to pay their debt and made different career choices to avoid that, a wildly unfair redistribution of wealth toward higher earning people. Guy’s, Fox News dubbed debt forgiveness, a handout to which they shockingly didn’t add for bumps, but give it time, that was from Vanity Fair. I mean, sometimes somebody just writes something so perfectly, you have to just quote them on it, there is no way to improve upon that. They seem to have also forgotten that many of them had their federal PPP loans forgiven, like so many people in Congress took out massive PPP loans, and then had those forgiven. The average American is getting 10,000, at most 20,000 and relief. Well, congressmen and women were taking out 10s of 1000s. And in some cases, millions of dollars in PPP forgiveness. It’s the hypocrisy for me fam. It wasn’t just read, though, progressives had some shade to throw to Nina Turner from Ohio said the student debt crisis is a $1.9 trillion problem. Biden made it a $1.7 trillion problem. This is not a solution. You know, we’re thinking about, we’re thinking about.
V Spehar 15:59
And I heard from you guys, too. I mean, I posted that video of like, here’s what is going on with student debt cancellation, it has, like, I think three and a half million views right now. And just like 10s of 1000s of comments. So I pulled some of the most common questions that I kept getting, and we’re going to answer them here. The White House said there’s more information, it’d be coming out frequently over the next four months. So just expect that while we got a lot of information yesterday, we’re not necessarily done refining what these points are going to be how they’re going to be actioned when you can expect to see it all that kind of stuff that’s gonna be happening over the next four months. Remember, student loans are on pause anyway. So it’s not like, you’re gonna get messed up, you’re gonna miss your chance. The only thing you missed your chance on is if you don’t apply for that PSLF loan, you gotta get that public service loan forgiveness thing. And again, remember by Halloween, do it now. Pause this, do it now come back. But here were the number one questions from tick tock. Does this debt relief extend to Parent Plus loans? The Wall Street Journal is saying yes, although was not included in the White House facts sheet just yet. They are predicting based on good authority that yes, Parent Plus loans will qualify for forgiveness. And they should, because while the government imposes a limit on the amount of undergraduate debt student can take out, the Parent PLUS program lets people borrow the total cost of attendance. So they were kind of like getting whole families in on the student debt crisis by like, allowing your parents to take out a loan for room and board or like books or personal expenses on top of your tuition. And if it’s not included, I’m going to tell you people are going to write it, it will be very bad news for families that incurred great debt attempting to educate their kids. So, Wall Street Journal says they have good authority. Yes, Parent Plus loans will be included. I tend to think they will I will let you know the second that we find out for sure. Or when it gets added to the White House Fact Sheet
V Spehar 17:42
Next question was if I take out loans now, will they qualify? No. I’m sorry, fam. It is only for loans taken before July 2022. So it’s not on any new loans. It’s just on the loans that existed as of July 2022. Folks were also asking, is it retroactive? What if I paid my loans? Will I see like a $10,000 check. Also no, and that is a bummer. I know, it was so hard to work to pay your loans. I feel that personally. It just this is the way the program shook out. It is only for debt that is still owed. So, no retroactive, super bummer. I feel you on that. We just gotta be happy for the people that did help. Because we know how hard it was to deal with this over the last couple decades. Does it apply to trade school loans? Probably. I mean, if they’re federal loans, then yeah, but you know, you gotta go to the website, student aid.gov/debt relief to identify yourself to be considered for debt relief. If you’re unsure, you can go there, you can find out what’s going on in your personal situation. And hopefully, yes, it should apply to like cosmetology school loans, if you got federal help, or like trade, schools, plumbing, stuff like that. Is there a way for me to find out if I had a Pell Grant? Yes, I was like, I felt like I was like, again, asking my mom to pull out the baby book to see if I was vaccinated for polio. I was like trying to pull up did I have a Pell Grant? Student borrowers can check their entire Federal Student Aid history on the Federal Student Aid website run by the Department of Education. And that includes being able to check for your Pell Grant history. You will find more information on your Aid Summary page once you’ve logged into studentaid.gov with your FSA ID and if you don’t know what your FSA ID is, there’s like a whole process like reset on there. So again, studentaid.gov. Next question I got what if my student loans are on default, will they be canceled? They will. If you do this thing, okay, you have to apply for the Fresh Start student loan program and arrange to make payments according to the Department of Education. Now you have until December 30th of 2023 to sign up for this Fresh Start program. But what it does is it will take all of your loans that are student loans that went into default, you don’t have to give a reason. It just gives you the opportunity to make them all hole and say okay, I’m gonna make my payments on it but it also allows the government to forgive the debt that you qualify for. So the Fresh Start program, now you have until December 30th of 2023 to sign up for it. But again, I would not wait. I would just try and get this shit together and like handled and off of your shoulders right now, okay? Because you never know with Congress and how shit works. Don’t trust it, do it today. Because if you don’t, and you forget, and then you don’t sign up for this Fresh Start program, your debts will remain in default. And if you did qualify for any forgiveness, no, it won’t get forgiven. So check it out again. studentaid.gov. Do the Fresh Start program.
V Spehar 20:29
And maybe the biggest question that I got next to the parent plus one who is paying for it? Look, you could tell your uncle with exactly zero background in macroeconomics to relax, okay, the government is all about shifting spending, they always have been and they just had a big win for Medicare. That is the Federally Administered health program. We’re now the Medicare people get to negotiate drug prices, which will save the government about $300 billion. And guess how much canceling these student loans cost? Yes, $300 billion. Exactly. It’s just shifts from one place to the other. This is how they do it. That is one way that they are offsetting the cost. But really, the money is all fake. And the rules are all made up. A lot of the debt isn’t even cash debt. It’s compounded interest money. Again, most folks and I just, I need you to hear this so that you can use it when somebody gives you shit for this. Most folks who took out loans have paid back the amount they borrowed from the government; they paid the balance back. And sometimes they paid almost that whole amount again in just interest. So we’re gonna do a special update later with an economist who will like, tell us the talking points you need on that whole situation. But I mean, no one ever complains about the military budget. No one complained about the PPP loans. You weren’t talking about rich people getting some money from the government that all went to them. And no one complains about like tax credits for corporations are a million things. So those who say it’s not fair, I say you’re right. It’s not fair. So what do you need? If you didn’t need student loan debt relief? What do you need? What is making you so mad that you don’t want other people to get something right? Let’s get in people’s faces the way that folks have fought for action on student debt, and let’s get your thing fixed to what is it? Do we need better mortgage rates? Yes. Do we need sometimes mortgage rate forgiveness for some predatory debt? Yeah, let’s get together and fight the same way that folks fought for student debt relief for whatever the thing is that you’re worried about and that you think is unfair. That’s how this works. This is the never ending carnival game called government. We have to play okay, but we have to play it together or all of the money will go to Amazon and we’ll all end up living in company towns and I just can’t go back, Emma Goldman. Just we can’t, we can’t do her wrong like this. Okay, unionize, fight together, believe in each other, be kind to each other. And I think be excited about student debt cancellation, even if it doesn’t apply to you.
V Spehar 22:50
Thank you for listening. I hope that this was helpful. Please let me know what else we can do. Leave me a voicemail, but how student loan forgiveness is like affecting you. If you have any more questions. Let me know if you have good news related to this. Like what does it mean to you to have this debt forgiven? And like, what does that mean for the way you look at the future? And what does that mean for the way that you consider maybe even getting more education? What does student debt relief mean to you, leave me a voicemail 612-293-8550, but don’t do that until you go to student aid.gov and fix all your loan stuff. Please. And then after you do that, if you have some time, subscribe to Lemonada Premium on Apple podcast follow me at under the desk news on Instagram Tik Tok and now YouTube. Let’s just keep talking about this. Let’s keep getting better answers. And again this weekend, we have a fascinating conversation about the other thing that we can’t avoid, death. I am going to talk with mortician and TikTok Creator Eileen Hollis about the business of death and really just take the scary out of it. It’s a fascinating conversation and it really brought me a lot of peace. So I hope you’ll tune in for it. Thank you so much for tuning into this special minisode I am going to come out of the closet. Again. No more pot closet. Alright, have a good day.