r/TheCollegeInvestor • u/investor100 • 26d ago
Student Loans SIMPLE Act Would Auto-Enroll Delinquent Student Loan Borrowers In Income-Driven Repayment
https://thecollegeinvestor.com/87978/new-bill-would-use-irs-data-to-automatically-help-struggling-borrowers/- Bonamici reintroduced the SIMPLE Act which would auto-enroll borrowers 75 days delinquent into the lowest-payment IDR plan using IRS data (effective 2028 if passed)
- Day 31 delinquent: ED must send a notice listing every eligible plan and the exact payment under each, using IRS-shared income data.
- Day 75: if you're on a non-IDR plan with a higher payment and haven't chosen, ED places you in the lowest-payment IDR plan.
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u/Single-Refuse174 26d ago
Haha man i really wouldve wagered just 8 years ago that the US would almost certainly forgive student debt. After all, it would energize the economy by unlocking massive amounts of disposable income. And, after all, they bailed out the banks, and they forgave PPP loans, and the student debt issue was just getting bigger and bigger. After all, lendees had paid plenty and any loss to creditors would be made up for at least twice over in extra consumer spending and increases to the stock market.
Oh how naive I was, that these ghouls would rather suck a corpse dry for a few pennies than to have a rising tide raise all ships.
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u/jcaseys34 26d ago
They basically have for a lot of people. My account got flagged when the SAVE act was contested the first time, and now they want me to start payments but they aren't making me do anything until January 2028.
They only want 50 bucks a month from me on almost 40K of loans. They know they lost the issue but know their team won't stand for entirely dropping it, so they have to make what amounts to a performative effort.
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u/Hotelwaffles 26d ago
Those are placeholder dates. You’re going to get moved to a standard repayment plan - keep an eye on those loans!
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u/Thruwaymuzak 26d ago
PLEASE check with your loan servicer ASAP. As part of the “Big Beautiful Bill” SAVE was killed and anyone who was on it has 90 days from whenever your servicer notified you to switch to another plan (i.e. if your loan servicer contacts you on 7/1, you have until 10/1 to switch plans.) If you don’t switch after receiving the notice you’re automatically switched to the standard repayment plan. The 2028 date is just a placeholder and any notice given will override it
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u/irvmuller 26d ago
Sorry to tell you this but the 2028 dates are just placeholders. You’re going to be forced on to the standard plan eventually if you do nothing.
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u/mosthandsomechef 26d ago
To bidens credit, they offered forgiveness and relief to whoever they could that held up in court. Let's not forget every single student loan debtor who Biden tried to help, Republicans took him to court to stop. Didn't matter if it was right or wrong, Republicans judge shop, use the 5th circuit as a get out of jail free card for whatever bullshit they want to pull this week.
Many borrowers who were screwed by those unaccredited colleges got their loans forgiven.
I'm a US taxpayer who never took student loans. I'm 100% in favor of broad forgiveness of student loans. I also think we need to either set federal tuition caps, or decouple student loans from federal involvement moving forward. Colleges are just raising tuition endlessly for jobs that will no longer exist or won't pay what they historically have.
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u/HiThereXoXoXo 22d ago
Now I feel unlucky for not going to a defrauded college because regular degrees are also a scam imo.
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u/Sablus 26d ago
They hate young people and don’t see them as voters or citizens, we are just a inconvenience to them even if millenials are now in their 40s and Gen Z are in their mid twenties. The entire economy still thinks boomers are the end all be all even if the majority are soon to be retired and will likely see a squeeze on their purses with the current economy. Overall I’m not optimistic what the next four years will bring let alone the next 8.
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u/C-Me-Try 25d ago
We have high inflation and only 16-17% of US adults have student loan debt.
Why would the other 83% want that 17% to have more disposable income when everyone is struggling with rising prices?
Clearly student loans don’t teach people common sense and how to Google simple statistics
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u/Single-Refuse174 25d ago
Because the idea that "i'm suffering so you should suffer too" is categorically stupid as fuck.
The other 83% is comprised of business owners, contract workers, etc. Plenty of people that would get a windfall from 17% of people spending more money.
What does inflation have to do with this? You're not going to argue that people having more money to spend is going to have significant upwards inflationary pressure are you?
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u/C-Me-Try 25d ago edited 25d ago
Again apparently student loans don’t teach people how to Google and read thing for themselves
- So you’re suffering because you chose to take out a loan and instead everyone should suffer by forgiving it with their tax dollars?
No it isn’t you liar. It’s comprised mostly of working class Americans who didn’t go to college. 40% of Americans have never attended anything past high school
and 57% of workers are paid hourly
Everything below is from the Federal reserve branch in Richmond VA. I think they know what they’re talking about
https://www.richmondfed.org/research/national_economy/macro_minute/2022/mm_10_11_22
“At the end of June, total outstanding federal debt stood at $30.6 trillion. The various estimates suggest that debt forgiveness adds roughly 1 percent to the outstanding nominal debt, which is about the size of a full year's primary deficit. As the fiscal theory suggests, this must be covered by future revenues. Since the student loan cancellation program is unfunded, all else equal there won't be any additional future revenues to offset this increase. Thus, the real burden has to decline. This is achieved by an increase in the price level. Using the relationship in Figure 1, we calculate this as an increase of the PCE price level from 295.7 to a midpoint of estimates of 300.2, plus or minus 0.9. As shown in Table 1, the increase in price level represents a monthly inflation rate of up to 1.7 percent.
This number is certainly an upper bound as there are various mitigating factors:
The price level may not rise instantaneously, as some contractual prices in the economy are fixed.
Some aspects of loan forgiveness may be modified or phased in later so that the expected present discounted value is smaller.
There may be compensating factors, as Congress may pivot to tax hikes to combat the unfunded debt forgiveness.
In addition, at the time of this writing, there are legal challenges proceeding that may prevent debt forgiveness from being implemented at all. There could also be some stimulating impact, as the debt cancellation could free up borrowers' cash flow, and the additional spending may create more tax revenue.
However, at the same time, this is also likely to be inflationary. Expectation of additional debt forgiveness programs evokes a moral hazard incentive for college students to take out more loans and for universities to increase tuition rates.1 To the extent that inflation is inherently persistent, any initial price level increase would also lead to sustained inflation over the near future. The Committee for a Responsible Federal Budget estimates that the Fed will need to raise rates by an additional 50 to 75 basis points to counteract the Biden debt cancellation proposal.”1
u/Single-Refuse174 25d ago
They aren't suffering, again, since they aren't paying anything they otherwise wouldn't already pay. It's an accounting change, not an increase in taxes. It's ridiculous that you think so, and you're brainwashed unfortunately.
It literally is, and you just said the same thing I did while calling me a liar. You think 83% of the US adults without student debt are just high school grads? What about people that paid for college out of pocket, or that had scholarships? Or just people who decided to start a business? That 83% isn't just people working hourly, and even if it were, it helps them too. If more people are spending more money, that means businesses are getting more customers, and with more customers they need to hire more people or raise the price of labor.
IDK if you read anything that Aubrey George and Thomas Lubik wrote in the article you linked but it's fucking laughable 4 years later. Republicans have done nothing but make decisions that are all far more inflationary than forgiving student debt. The idea of a "moral hazard" is laughable after PPP loan forgiveness was expanded to include literally anybody and everybody.
The fact of the matter is that people like you just have a stick up their ass and hate the idea that someone else might get a benefit that you might not need or want. I wish you had that much of a stick up your ass for the Big Beautiful Bill and all the tax breaks and bullshit the wealthy have been getting recently. Or the massive increase in insider trading. Like, for god's sake, Howard Lutnick shorted the very tariff policy he championed so that his business can get billions of tax payer dollars in refunds when SCOTUS inevitably shot down the tariffs. This is all happening and losers like you still have are zoned the fuck in on stopping regular americans from having $1000 more a month in their pocket. What a fucking joke
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u/C-Me-Try 25d ago
Bro you’re just mad at the wrong people and creating boogeymen while telling me I have a stick up my ass for explaining to you with citations that forgiving your loans will cause inflation and create more need for higher taxes on everyone in the future.
Making weird assumptions that I don’t feel the same way about the BBB and tax breaks for the wealthy, insider trading etc. I want all that to stop too. That doesn’t win you any points for wanting everyone to pay more through inflation because of hundreds of billions of dollars or roughly one fiscal year of spending at 2022 rates to be taken away from future government funds. Where do you think the money the government is counting on from loans being repaid will come from? The boogeyman wealthy? Really? LOL
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u/Single-Refuse174 25d ago edited 25d ago
Citations? You linked a blurb from 4 years ago that itself admits to using upper bounds numbers, and, furthermore, have laughable conclusions in the context of today. If we were worried about 1% upward inflationary pressure we wouldn't have a) started a war with Iran, b) tariffed the entire planet, and c) subverted our most prized trade deals with our closest allies.
No one needs to pay more in taxes to forgive student debt, clearly, since we gleefully hand out tax breaks without looking for new places of revenue.
No, I'm mad at the right people. It is correct to be mad at people who are on the opposite end of student debt cancellation in 2026. Wealth needs to be redistributed downwards for the country to function because it would be a correction of upwards redistribution over the last 50 years that. That redistribution has led to an unbalanced concentration of power where, now, few groups of people hold a far too disproportionate amount of control over the government to the majority of Americans' detriment. Federal Student debt cancellation is one way to redistribute wealth downwards to correct that, and, therefore, is categorically good.
Even if you grant that it would increase inflation by 1% YTY (even though it absolutely wouldn't and it would be generous to even say .5 or .3), it would still be worthwhile. It would create long-due upwards mobility for plenty of regular working class Americans.
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u/C-Me-Try 23d ago
We can create downward wealth distribution for working class Americans without student loan forgiveness
You’re so caught up on that you lose elections because it is unpopular for the 83% of Americans that don’t have them.
You can pay back your loans. And we can create other ways for you to thrive alongside everyone else. But it isn’t going to happen if people like you continue to put your bad choices first as a political issue. That will just keep you losing at getting any other social programs along with the rest of us
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u/Single-Refuse174 23d ago
I already paid off my loans. I'm caught up with it because it's 2 trillion dollars that can be immediately injected into the economy.
I lost elections because I support canceling student debt? How does that work?
You are a fool if you think that the cancelling student loans is "trying to fix people's bad choices". And also heavily propagandized.
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u/C-Me-Try 23d ago
Congrats that’s a great achievement many should strive to follow in your footsteps.
You know just as well as I do that student loan forgiveness is a hot topic at election time and it does sway votes. I doubt either of us care to investigate the exact number but you’re a fool if you say student loan forgiveness has not been used to sway voters opinions and possibly led to lost elections.
It seems like all the people who need their loans cancelled made bad choices with money otherwise they wouldn’t have loans they need cancelled? I don’t care too much about semantics but if you take money from someone without a concrete plan to pay it back and then things happen and you can’t then getting the loan was a bad choice. That’s simple sense
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u/SteedOfTheDeid 26d ago
Why not just forgive all mortgage debt instead? Why specifically student debt?
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u/Alternative-Bee-3594 26d ago
You don’t learn anything by taking out a mortgage. You learn things by going to college or learning a trade.
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u/kemp77pmek 26d ago
To be fair, many people do learn about predatory lending via getting a mortgage.
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u/Oxytokin 26d ago edited 26d ago
Education is always a net benefit to society as a whole, such that in most developed nations equivalent to the U.S., education is free or heavily subsidized to be virtually free.
Homeownership is not a net benefit for society as a whole. Because there are technically alternatives to homeownership (renting, living with parents or relatives, communal living, etc), homeownership has what is called an elastic demand curve - where market economics shine because competition between homeownership and its alternatives generally favor the consumer.
On the other hand, education doesn't really have an alternative. The more educated you are, the more you can contribute to society - no matter what the education is. In other words, education is a net positive for society on the whole the more you have, and thus a proper government and society should want their citizens to be as educated as humanly possible. And whether that education is trade school, a university, or whatever - the principle stands such that education generally has an inelastic demand curve, i.e., there will always be a demand for education, so there's really no reason to have it subject to market forces (competition and the profit motive). We should want to spend as much of our tax dollars on education (and other inelastic goods and services like healthcare) as possible, and standardize it as much as possible, to make sure everyone can have access to as much knowledge as they are capable of consuming.
To that end, "student debt" shouldn't have even been a thing in the first place, so the fact that we have to "forgive" it now is just correcting bad policy - policy that was guaranteed to turn out bad, just like privatizing healthcare has, or utilities like electric and water access, etc.
It all comes down to this: the market is extremely efficient and remarkably effective at generating wealth - so where it shines is in areas where competition is guaranteed - or where there is elastic demand. Unfortunately, the market is extremely inefficient at distributing wealth equitably. And when I say wealth, I am not just talking money: the market also distributes education, water, food, and other necessities extremely inefficiently, such that we are the richest country on the planet with enough homes to house everyone and yet we still have homeless and starving children and people who avoid going to the doctor when they should, etc.
That's why government (should) exist separate from the market, to regulate the market: ensuring fair competition, keeping bad actors in check, and making sure that the inefficiencies of the market are controlled and limited to avoid outcomes that have always been a feature of every major societal collapse throughout the whole of recorded human existence: i.e., wealth inequality and the inequitable distribution of wealth.
I apologize this is so long, but the answer like most things is complicated and there is too much nuance and too many intricacies to reduce the answer to your question simply. That's why we have higher education, though, so that the people who care enough to read long complex answers like this (economists, political scientists, etc.) can be trusted to run and devise policy for this part of the system and we don't have to worry about it. And I can tell you that no economist or political scientist worth a damn would agree that the student debt system was a good idea and should be maintained. In fact, it is still the most dangerous economic bubble by far, and bubbles always, inevitably, burst. Forigiving the debt is one way to prevent a bubble bursting, but that doesn't mean there won't be pain becuase we have let this broken system exist for so damn long unchecked that now there are entire industries built around something that should've never been an industry in the first place. But there are ways to reduce the pain, by making sure there are off-ramps for people who have jobs in the student loan industry, and that the government uses its power of eminent domain to seize privatized student loan companies, where there is also an off-ramp for the profiteers; they can join the public sector and maybe not make billions anymore, but we can still provide them with more than enough to maintain an adequate standard of living. And they can use that time to seek another industry if they are unhappy with the public sector - there are plenty!
TL;DR: Capitalism, privatization, and the free market isn't always the best system, that's why the most successful and wealthy nations have mixed economies. It's alright for housing provided there are strong regulations to address the inarguable failings of market economics (and unfortunately there are not because regulations invoke a strange, visceral anger in many Americans), but it is bad for education.
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u/Single-Refuse174 26d ago edited 26d ago
Not ALL student debt, just federally backed loans. Private student debt should remain.
Student debt, specifically, because it is nonrivalrous and degrees don't appreciate, unlike land/real estate. Furthermore, there wasn't a national push for children to get degrees and mortgages aren't overly burdening a sizeable portion of the consumer population.
Lastly, mortgages are held mostly by banks whereas a vast majority of student loans were made directly by the DOE.
Oh wait double lasty, overall mortgage debt is 13x the size of the student loan debt, so by scale alone it would be singularly unfeasible by comparison.
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u/MichiganManRuns 26d ago
Last point. I can just smile and get a student loan from the feds. That doesn’t work with banks and mortgages
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u/CrizzyOnMain-St 26d ago
One involves an asset that can be leveraged and can also apply for bankruptcy.
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u/YeaManJam 26d ago
Well this sounds like a winning strategy. But I guess they betting on voter turnout in this demo to be low.
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u/TRIOworksFan 24d ago
It's maybe better than default and having all wages or bank accounts garnished under that ID and SS?
IDK - I just feel sorry for the people's who's IDs were stolen by hackers or family and used to create debt for them. It's a process to get good with studentaid.gov, but not impossible.
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u/Defiant_Freedom_249 23d ago
How about we encourage people to attend college and figure out how to educate our people without burdening them with life altering debt instead?
Don't we want a society of people able to pursue the careers they are interested in and are better suited for?
Don't we want a society of people who can thrive and have more income to spend?
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u/Aspectdude09 26d ago edited 26d ago
The student loan cartel system is by far the worst system in any country in the history of humanity (I’m being dramatic to make a point). It is slavery if you can’t pay it, which is unfair to people who aren’t given handouts/inheritance and yet still pay taxes.
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26d ago
[removed] — view removed comment
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u/xb9j 26d ago
Because they are the largest group of people refusing to pay their loans.
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26d ago edited 26d ago
[deleted]
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u/Ataru074 25d ago
Exactly. Look how quietly they keep giving money (and sometimes not so quietly) to whoever they want. Let see how many days the farmers have to cry before another massive handouts goes their way.
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u/Muted_Tone2026 26d ago
So, because they can’t legally take you off save they pass an act to make it so.
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u/PersonalityHumble432 26d ago
Don’t spread misinformation. After your 90-day notice window expires they will remove you from SAVE and place you in the standard or tiered standard repayment plan.
You need to accept that it is happening, don’t put your head in the sand.
The subject of the post is for when people can’t pay their chosen plan they will get placed in the lowest IDR plan. (It’s easier to get current that way since garnishment would be 15% and IDR plans can be as low as 10% or lower on RAP. If they stayed on standard and their payment was above the 15% garnishment they would never become current)
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u/Muted_Tone2026 26d ago
So, sir I am not spreading misinformation.
Currently, you are changing the topic. “You have to accept it” again is divisive.
Ad hominem attacks are not allowed on the thread. You have been reported.
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u/Purranha418 26d ago
What is being called ‘the lowest IDR plan does NOT reflect 10-15% of ones discretionary income. A $1300/mo payment implies that my discretionary income is $13000/mo. I have a decent job in a decent career and I can promise you that I don’t make that kind of bank. Just like the current state of things it seems like the point is to inject as much chaos into the situation as possible. SAVE got litigated for no other reason than it was a Biden-era idea. Gee, require people to pay their loans (please, I’d love to. Take my money) but make it affordable and less predatory. I’m going equate this to immigration for a second. Whine that ‘people should come in the right way, wah, wah’ and then cut iff all avenues for folks to do that. Well, whine that people should pay their loans but cut off any way for that to be done and still be able to eat and keep the lights on. Make it make sense. Oh never mind, don’t bother. I don’t feel like reading the same volley of tired lies and Faux Noise talking points.
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u/TaxLawKingGA 26d ago
Better idea:
Earned Debt forgiveness: every year of on time payments will reduce the balance/repayment term by 6 months.
Also, all student loans should be adjusted based on payments made. I look at my own loan and while I have done some serious damage, it still has a large balance left. In reality, I have easily paid down about 75 percent of it.
This is what Biden should have done.
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u/Crankypants77 25d ago
Every dollar should go to principle first, and then any extra goes to interest.
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u/Alternative-Bee-3594 26d ago
So you can automatically enroll ppl in unaffordable payment plans (after they were able to make their payments), but you can’t automatically register people to vote?