--:-- Sean Rameswaram: Welcome to Today Explained. I'm Sean Rameswaram.
--:-- Sean Rameswaram: President Joe Biden has a plan to relieve student debt. NPR's Cory Turner has an explanation of why it's not going very well.
--:-- Cory Turner: So in the past six weeks or so since the announcement... Using the authority Congress granted to the Department of Education, we will forgive $10,000 in outstanding federal student loans.
--:-- Cory Turner: We've gone from, you know, borrower jubilation. Like a weight was lifted off my shoulders, mostly for my parents because it stresses them out like a lot. And conservative excoriation. I think it's against the law what this president and the Democratic Party are doing.
--:-- Cory Turner: To rolling out of this plan. Everyone is waiting for the application to come out in the coming days or weeks. And then last week, the lawsuits hit.
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--:-- Cory Turner: A powerful data structure adapts to your business model, syncs in all your contacts in minutes, and enriches your business with actionable data.
--:-- Sean Rameswaram: Adio says it also allows you to create those email sequences, those real-time reports, those powerful automations. which they claim can help you build what matters most, your company.
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--:-- Sean Rameswaram: That's A-T-T-I-O dot com slash todayexplained.
--:-- Sean Rameswaram: Support for this show comes from strawberry.me. Be honest. Are you happy with your job? Or are you stuck in one you've outgrown or never wanted in the first place?
--:-- Cory Turner: Six Republican-led states taking action to block it. In a lawsuit jointly filed today in federal court in Missouri, The state accused the president of overstepping his executive authority.
--:-- Sean Rameswaram: Today explained, no good deed goes unpunished. President Biden tried to relieve a bunch of Americans of their student loan debt, and now he's being sued.
--:-- Cory Turner: Cory Turner's been following the story for NPR. Not only did three different lawsuits hit last week, but we also saw the administration very quietly in response to these lawsuits start to actually change the plan itself, which suggested a kind of fear of legal exposure that we hadn't seen before.
--:-- Sean Rameswaram: I want to talk more about the lawsuits eventually, but let's just dial it back for a minute here and talk about how President Biden decided he would forgive student debt.
--:-- Cory Turner: Well, I think there are a couple different answers here. The first one is he made this promise back on the campaign trail when he was running for president.
--:-- Cory Turner: That's why I proposed and the House, Nancy, put it in the plan to immediately provide $10,000 in debt relief as stimulus right now, right now for students.
--:-- Cory Turner: Because he was running against more liberal candidates like Senator Elizabeth Warren, I think he knew he needed to make some sort of promise to borrowers that he would do something like what she had already committed to.
--:-- Cory Turner: $10,000 is just not enough help for enough people. $50,000 helped us reach the point where we could cancel all debt for about 85% of those carrying student loan debt.
--:-- Cory Turner: And I think the challenge for him is after he won, the pressure was pretty unrelenting from civil rights groups, from borrower advocates, and frankly, from other politicians in his own party.
--:-- Cory Turner: The president can do it with the flick of a pen. All he has to do is sign an executive order. He doesn't need a single senator.
--:-- Cory Turner: Also, there's a very real argument to be made that our higher ed system is pretty broken, that our lending system is broken, and that it does disproportionately hurt traditionally disenfranchised borrowers, Black borrowers especially, who often are showing up at college without the kind of family wealth that many white borrowers have to protect themselves from incurring a lot of debt up front.
--:-- Cory Turner: who due to generations of what I would characterize as precise, intentional policy violence, have been forced to take on higher rates of student debt for just a chance, the same degree, as our white peers.
--:-- Cory Turner: It was just getting out of hand and there was a very real equity argument to be made there.
--:-- Cory Turner: And then there's the practical argument, which is he did it because he could do it or he thought he could do it.
--:-- Cory Turner: And so he was faced with this decision where because of this law that was passed back in the early 2000s by Congress called the HEROES Act, and it was passed in the wake of 9-11, the HEROES Act basically says, look, it's a national emergency.
--:-- Cory Turner: And in a national emergency, we think the education secretary should have the right to maybe exercise some flexibility and grace on behalf of borrowers who are struggling.
--:-- Cory Turner: And so what the Biden administration saw in that law was flexibility to say, well, we're in another national emergency. It's different from 9-11. It's COVID, but it's still a national emergency.
--:-- Cory Turner: And maybe we can use that authority to not only pause repayment, but erase debts entirely.
--:-- Cory Turner: And now what we're seeing play out is a very real legal debate around whether or not he overstepped.
--:-- Sean Rameswaram: So what does Biden do? What does the forgiveness look like?
--:-- Cory Turner: I mean, the basic contours of the plan are if you as an individual earn less than $125,000 a year, you qualify for up to $10,000 in debt relief.
--:-- Cory Turner: They did something kind of last minute, which was super interesting, which is they expanded that to $20,000 debt relief if you received a Pell Grant to go to college.
--:-- Cory Turner: And a Pell Grant is essentially free federal money that flows to borrowers who are low-income, who might have trouble affording college otherwise.
--:-- Cory Turner: Both of these targeted actions are for families who need it the most.
--:-- Sean Rameswaram: How many people stand to have their student debt relieved or completely wiped out by this plan?
--:-- Cory Turner: I mean, we think it's the vast majority of borrowers in the student loan portfolio.
--:-- Cory Turner: We're talking about probably more than 40 million people.
--:-- Sean Rameswaram: And somewhere around half technically should qualify to have most or all of their debts erased.
--:-- Cory Turner: When you find out the Pell Grant kids get an additional $10,000.
--:-- Cory Turner: The administration has said the application will be straightforward and simple.
--:-- Sean Rameswaram: There's no application yet? They have not released it yet.
--:-- Cory Turner: They are still working on it.
--:-- Sean Rameswaram: Huh. Yeah, they announced the policy at least six weeks or so before they even had an application.
--:-- Cory Turner: Is it kind of like Obamacare where they passed Obamacare, but then they had to build the thing and then the thing rolled out and it was kind of a mess and then they had to fix it and tweak it?
--:-- Sean Rameswaram: Exactly. I mean, I think the very tired metaphor that's really apt here is they're building the plane as they fly it.
--:-- Cory Turner: Is that because this has really not been tried before? Is this unprecedented?
--:-- Sean Rameswaram: It is.
--:-- Cory Turner: It hasn't been tried before.
--:-- Sean Rameswaram: It's enormous in scope.
--:-- Cory Turner: Obviously, people who were going to save thousands upon thousands of dollars were happy when this was announced.
--:-- Sean Rameswaram: But a bunch of other people were also quite unhappy.
--:-- Cory Turner: I don't have the words to capture their loathing for this policy.
--:-- Sean Rameswaram: Can somebody please explain to me why these kids that took out big old loans for useless education think that the loans should be forgiven?
--:-- Cory Turner: Think about our veterans who couldn't afford college, who were promised that they would get college tuition paid, and now they hear they didn't really need to go serve.
--:-- Sean Rameswaram: We're also simultaneously angry on behalf of the people who paid off their loans and feel screwed.
--:-- Cory Turner: And you know why they feel screwed is because they got screwed.
--:-- Sean Rameswaram: That's why they feel screwed.
--:-- Sean Rameswaram: But it's also blatantly unconstitutional for President Biden to unilaterally take this cynical election year action without the required congressional authorization.
--:-- Cory Turner: He is, after all, the president, not our king or dictator.
--:-- Sean Rameswaram: I mean, they see it as illegal. They see it as unconstitutional.
--:-- Cory Turner: You know, they argue that the Constitution is very clear.
--:-- Sean Rameswaram: Congress controls the purse. Congress gets to spend money, not the president.
--:-- Cory Turner: And, you know, the Congressional Budget Office has said this will eventually cost the U.S. government about $400 billion.
--:-- Sean Rameswaram: Has the Biden administration said anything about how this is essentially being paid for, this $400 billion giveaway?
--:-- Cory Turner: Not really.
--:-- Sean Rameswaram: No, because really up until the CBO score, I think the Biden administration has tried to distance itself from other estimates.
--:-- Cory Turner: One thing that I think you'll hear from administration officials and also some outsiders is that this isn't simply cutting a check for $400 billion, which also figures into the administration's legal argument here that, you know, the president isn't spending $400 billion.
--:-- Cory Turner: He's canceling debts. equivalent to roughly $400 billion.
--:-- Sean Rameswaram: And so the administration would argue that like, you know, look, before the pandemic, we know that one in five borrowers were in default anyway.
--:-- Cory Turner: So there is a very real argument that a lot of this money was never going to come back to the federal government.
--:-- Sean Rameswaram: Some of it would have though.
--:-- Cory Turner: And I think what they're saying now is, well, we don't dispute the cost anymore, but we still think it's worth it.
--:-- Cory Turner: We still think this is going to help millions of people start new lives, buy homes they couldn't previously afford, buy that car they couldn't previously afford, help cover child care, you know, with money that they don't have to spend on a student loan payment anymore.
--:-- Sean Rameswaram: In addition to criticism coming from conservatives who take the side of the lenders, perhaps, there's also this criticism that these aren't the people who need a handout from the federal government.
--:-- Cory Turner: Does the Biden administration have an answer to that critique?
--:-- Sean Rameswaram: Not a direct answer because I'm not sure there's anything you can do to undercut that argument's legitimacy.
--:-- Sean Rameswaram: It is on its face accurate. These are millions of Americans who this policy will not help simply because they didn't go to college.
--:-- Cory Turner: Like that is a fair argument.
--:-- Sean Rameswaram: You know, I want them to feel seen as well.
--:-- Sean Rameswaram: I'm not going to downplay what must be some very real frustration on their part.
--:-- Sean Rameswaram: It ain't just controversy Biden's courting here, it's lawsuits. More with Corey on that in a minute on Today Explained.
--:-- Sean Rameswaram: Support for Today Explained comes from Built Rewards.
--:-- Cory Turner: These days, it seems like everybody has a rewards program. You swipe your card and you get one cent on the hundred dollars.
--:-- Sean Rameswaram: But with your rent, frequently, you just pay month after month. You never get anything from it other than that roof over your head.
--:-- Cory Turner: Not anymore, says Built Rewards.
--:-- Sean Rameswaram: Built Rewards says it lets you earn points on your rent.
--:-- Cory Turner: By paying rent through Built, they say you can earn flexible points that can be redeemed toward hundreds of hotels and airlines, perhaps a future rent payment, your next Lyft ride, and so much more.
--:-- Sean Rameswaram: Your home isn't just where you sleep, it's your community, and Built wants you to go out and do things in the community.
--:-- Cory Turner: You can eat at your favorite local restaurants, then earn more points.
--:-- Sean Rameswaram: You can get VIP treatment at certain fitness studios.
--:-- Cory Turner: You can enjoy exclusive experiences just for Built members every month.
--:-- Sean Rameswaram: When you're ready to travel, they say Built points can be converted to miles or hotel points all around the world.
--:-- Cory Turner: You can earn points on rent and around your neighborhood wherever you call home by joining built.com slash explained.
--:-- Sean Rameswaram: That's J-O-I-N-B-I-L-T dot com slash explained.
--:-- Sean Rameswaram: Support for this show comes from Macy's.
--:-- Cory Turner: It's almost fall, and that means it's time to cycle your wardrobe to the cold setting.
--:-- Sean Rameswaram: Because while everyone loves a breezy summer outfit But let be real layering is even more fun
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--:-- Cory Turner: You can even throw in some textural layers for contrast, like a faux fur bomber jacket from Karl Lagerfeld Paris.
--:-- Sean Rameswaram: Whether your old favorite sweater or coat is on its last threads, or you're just craving a new vibe to switch things up, Macy's has got you covered this season.
--:-- Cory Turner: Find the perfect layering pieces for you by exploring the Macy's Fall Fashion Style Guide.
--:-- Sean Rameswaram: Shop in-store or online at Macy's.com.
--:-- Sean Rameswaram: Can you imagine forgiveness? Today Explained Vox, Cory Turner, NPR.
--:-- Sean Rameswaram: People are suing the Biden administration over its plan to relieve students of their debt. Who is suing thus far?
--:-- Cory Turner: Let's talk about lawsuits. I'll give you the laundry list.
--:-- Cory Turner: We basically have three suits from last week that I think are interesting and they're all very different.
--:-- Sean Rameswaram: Conservatives, it feels to me like they're lining up the planes on the tarmac, and each one will take off, and they're trying to figure out what are the legal headwinds here.
--:-- Cory Turner: Where do we get purchase against this policy we don't like?
--:-- Cory Turner: And so one lawsuit goes, and then they see how the administration reacts, and then the next one goes, and it's different.
--:-- Sean Rameswaram: Huh.
--:-- Cory Turner: The first one was filed by a borrower who lives in the state of Indiana, and that's important because Indiana is one of a handful of states that says it will charge income tax.
--:-- Sean Rameswaram: It will tax this debt relief.
--:-- Cory Turner: Frank Garrison's attorney says this student loan forgiveness program will do nothing for him except to make him pay a one-time state tax payment of $1,000.
--:-- Cory Turner: And his argument is, I don't want this relief because I don't want to have to pay that tax because in a couple years I'm going to qualify for public service loan forgiveness that will erase all of my debts.
--:-- Sean Rameswaram: The second lawsuit was filed by six states just a couple days after that first one.
--:-- Cory Turner: Iowa is suing the Biden administration along with five other Republican-led states.
--:-- Sean Rameswaram: The six states accuse the administration of overstepping its executive powers.
--:-- Cory Turner: And this one is more complicated.
--:-- Sean Rameswaram: The most important part of the suit is that it was filed in federal court in Missouri.
--:-- Cory Turner: And that's because at the center of the suit really is this lone servicer called Moheela.
--:-- Sean Rameswaram: At Mohella, we understand that student loans can seem like this. But with our help, student loans don't have to be scary.
--:-- Cory Turner: We're just regular people like you. Even if you're behind on your payments, we're nearing default.
--:-- Sean Rameswaram: We will help you find a plan that fits your needs.
--:-- Cory Turner: You could even qualify for a repayment plan with a monthly payment as low as $0.
--:-- Sean Rameswaram: Our representatives will help you complete the application.
--:-- Cory Turner: We can help you with just one call.
--:-- Sean Rameswaram: Speak with us today by calling 636-787-2631.
--:-- Cory Turner: And Mohele services a lot of federal direct loans.
--:-- Sean Rameswaram: A lot of borrowers who might be listening to this right now have Mohele as a loan servicer.
--:-- Cory Turner: They also, though, hold on to a lot of those old fell loans.
--:-- Sean Rameswaram: And the argument in this case from a bunch of state attorneys general, including the AG from Missouri, is Mohele is going to be hurt by this policy to let all of these old fell borrowers basically cancel their debts.
--:-- Cory Turner: Mohele was profiting off of this and they were planning for years to come to have these debts as like a source of revenue.
--:-- Sean Rameswaram: If you just erase them all, well, that hurts Mohele.
--:-- Cory Turner: And Mohele is a state-based agency.
--:-- Sean Rameswaram: So that hurts the state of Missouri.
--:-- Cory Turner: And there's a third lawsuit.
--:-- Sean Rameswaram: And then there's the third suit that was filed at the very end of last week by the attorney general of Arizona.
--:-- Cory Turner: And again, he made a couple new arguments.
--:-- Sean Rameswaram: He argued that in canceling all of these loan debts, the state of Arizona would potentially lose a lot of tax revenue in future years.
--:-- Cory Turner: And then he also made this really interesting argument that in just canceling all this debt now, it essentially neutralized the impact of a different student loan forgiveness program, public service loan forgiveness, which he said his office, the attorney general's office of Arizona, had used the promise of PSLF to entice a lot of good young attorneys who were coming out of school with a lot of debt.
--:-- Sean Rameswaram: You know, come work in the AG's office, put in your 10 years and have your debts erased.
--:-- Cory Turner: Well, his argument is this is going to make it harder for me now to recruit good attorneys who are going to find much more lucrative jobs in the private sector.
--:-- Sean Rameswaram: So you've got three lawsuits, a borrower saying, I don't want this relief. You're messing with my finances.
--:-- Cory Turner: I had a plan.
--:-- Sean Rameswaram: Another lawsuit about interfering with state revenue.
--:-- Cory Turner: Another lawsuit about interfering with other programs.
--:-- Sean Rameswaram: These all sound somewhat legitimate in terms of arguments being made about this messing with some other stuff.
--:-- Cory Turner: How is the Biden administration responding to these lawsuits?
--:-- Sean Rameswaram: Well, so its response to the first lawsuit with the borrower was to include an opt-out in the policy.
--:-- Cory Turner: As soon as that lawsuit was filed, the White House came out and said, this guy's not going to be harmed because he can opt out.
--:-- Sean Rameswaram: Anyone who doesn't want debt relief can just opt out.
--:-- Cory Turner: That was news. They hadn't actually announced an opt-out before, but it also seemed to work.
--:-- Sean Rameswaram: The judge in that case a couple days later said, look, if there is an opt-out, which there seems to be now, it's difficult for you to argue you're going to be hurt by this.
--:-- Cory Turner: That was easy.
--:-- Sean Rameswaram: In response to the second lawsuit that argues these private lenders and state-based agencies that profit off of these old fell loans will be harmed,
--:-- Cory Turner: It's the federal family education loan.
--:-- Sean Rameswaram: These loans are guaranteed by the federal government, but they're held by private banks, commercial lenders, state-based agencies.
--:-- Cory Turner: We've learned borrowers whose federal student loans are guaranteed by the government but held by private lenders will now be excluded.
--:-- Sean Rameswaram: That's around 770,000 people.
--:-- Cory Turner: Even though back in August they were told all they had to do was consolidate their loans into new federal loans and then they qualify
--:-- Sean Rameswaram: And then the third lawsuit we haven seen much of a response to
--:-- Cory Turner: So as things stand now a judge has weighed in on the fursuit and said okay, yeah, I'm not convinced here.
--:-- Sean Rameswaram: The other two though are still interesting and active and everyone I talk to is really curious to see if any of these plaintiffs are granted standing.
--:-- Cory Turner: So that's what we're waiting for.
--:-- Sean Rameswaram: This is what the administration is worried about.
--:-- Sean Rameswaram: If they're granted standing, then they could get a temporary restraining order or potentially some kind of injunction that could prevent the Biden administration from implementing its relief plan.
--:-- Cory Turner: It is hard to overstate the importance of the wild card here, which is who's the judge?
--:-- Sean Rameswaram: Where's the court?
--:-- Cory Turner: Right. Right.
--:-- Sean Rameswaram: So the second lawsuit was filed, like I said, in federal court in Missouri.
--:-- Cory Turner: Right.
--:-- Sean Rameswaram: And all it takes is one judge to say, yeah, I think you've got enough here that I will I will grant you standing and I might entertain the idea of at least pausing this thing.
--:-- Cory Turner: Let's see.
--:-- Sean Rameswaram: From your reporting on this story, do you get the sense that the Biden administration saw this coming, saw the blowback coming?
--:-- Cory Turner: They had to have known what they were getting into.
--:-- Sean Rameswaram: The thing that surprises me about all of this, especially the last week, is they were clearly either surprised or miscalculated.
--:-- Cory Turner: or else they would not, six weeks after having told hundreds of thousands of borrowers they qualify for debt relief, they would not have then turned on a dime and tried to very quietly change the language on the Ed Department's website to say, no, you don't qualify for debt relief.
--:-- Sean Rameswaram: That's a mistake.
--:-- Cory Turner: That's the kind of thing they should have either been clear about from the start or not done at all.
--:-- Sean Rameswaram: You know, because ultimately what this created was simply false hope.
--:-- Cory Turner: and they clearly made this change in response to the lawsuits.
--:-- Sean Rameswaram: Then again, all of the experts I've been talking to say they should have seen this legal strategy coming from a mile away.
--:-- Cory Turner: This just feels like another reminder that it's really hard to push your agenda without legislation in this country.
--:-- Sean Rameswaram: The fact that it's not legislation is the reason it's happening.
--:-- Sean Rameswaram: Again, Biden tried to expand the child tax credit. He pitched free universal child care. He pitched high-quality free preschool. He pitched free community college.
--:-- Cory Turner: And it all got logjammed in a divided Senate.
--:-- Sean Rameswaram: And so this is happening, this policy, as opposed to any of those, simply because of language that was included in a law that was passed back in the early 2000s in response to 9-11, and it just so happens.
--:-- Cory Turner: You know, that's how we got here.
--:-- Sean Rameswaram: It's really interesting how tenuous those threads are.
--:-- Sean Rameswaram: Where does this leave the people caught in the middle of this?
--:-- Cory Turner: How are people supposed to know if they can count on this debt relief or not and plan the next 5, 10, 15 years of their lives?
--:-- Sean Rameswaram: Whether you feel sympathy for people who owe student debt or not.
--:-- Cory Turner: So I won't pretend to know what's going to come of these lawsuits.
--:-- Sean Rameswaram: It is possible that nothing will come of these lawsuits.
--:-- Cory Turner: And if that is true, then the vast majority of the borrowers who were celebrating in August that they're going to have $10,000 or even $20,000 of student loans erased will be able to celebrate again at some point in the coming weeks or months when those debts are in fact erased.
--:-- Sean Rameswaram: The people who will not are those fell borrowers.
--:-- Cory Turner: We talked about earlier.
--:-- Sean Rameswaram: $800,000, a million, we're not sure. they have been cut out of this, at least for now.
--:-- Cory Turner: And it's unclear how they might be included in the future.
--:-- Sean Rameswaram: Those folks probably get the worst deal right now.
--:-- Cory Turner: It's hard talking to these borrowers and not feel their frustration and anger.
--:-- Sean Rameswaram: But again, the vast majority of borrowers who will qualify for this will get debt relief unless one of these lawsuits finds, you know, a sympathetic hearing in court.
--:-- Cory Turner: And then that opens the door for these sides to really argue the merits and to debate, you know, Heroes Act on one side, traditional reading of, you know, the powers of the presidency versus Congress on the other side.
--:-- Sean Rameswaram: And who knows what will happen?
--:-- Sean Rameswaram: Corey Turner is an education correspondent at NPR. Listen to him on the radio. Find his work at NPR.org.
--:-- Sean Rameswaram: Our show today was produced by Victoria Chamberlain, who, full disclosure, had her student loans forgiven through the public service loan forgiveness program after serving in Army.
--:-- Sean Rameswaram: We were edited by Matthew Collette, who finished paying off his undergraduate loans in the pandemic.
--:-- Sean Rameswaram: Congratulations, Matthew.
--:-- Sean Rameswaram: Paul Robert Mounsey discovered he might be eligible for loan forgiveness while mixing this show.
--:-- Sean Rameswaram: Congratulations, Paul.
--:-- Sean Rameswaram: We were fact-checked by Laura Bullard, who went to cheap state-subsidized schools her dad helped her pay for.
--:-- Sean Rameswaram: Ditto for me. Thanks, Dad. Call me.
--:-- Sean Rameswaram: We all have moments where we could have done better. Like cutting your own hair.
--:-- Sean Rameswaram: Oh, yikes.
--:-- Sean Rameswaram: Or forgetting sunscreen so now you look like a tomato.
--:-- Sean Rameswaram: Ouch.
--:-- Sean Rameswaram: Could have done better.
--:-- Sean Rameswaram: Same goes for where you invest.
--:-- Sean Rameswaram: Level up and invest smarter with Schwab.
--:-- Sean Rameswaram: Get market insights, education, and human help when you need it.
--:-- Sean Rameswaram: Learn more at schwab.com.
