What We Know About Biden’s Plan to Forgive Student Loans
PJoe Biden was a candidate for a plan that would forgive some $1.6 trillion of federal student loans owed by 44 million U.S. students. “Young people and other student debt holders bore the brunt of the last crisis,” he saidThe pandemic that decimated the economy in March 2020. “It shouldn’t happen again.”
More than a year into his presidency—and months away from midterm elections that threaten to eliminate the Democrats’ narrow majorities in the House and Senate—he’s facing pressure from progressive lawmakers and advocates to follow through.
But it’s clear that whatever Biden does will be short of the $50,000 across-the-board loan forgiveness championed by Sen. Elizabeth Warren and other activists—if he chooses to cancel debt at all.
What have the Biden administration said thus far
“I am considering dealing with some debt reduction,” Biden told reporters at the White House on April 28, adding that canceling up to $50,000 in debt per borrower is not on the table.
He added: “I’m in the process of taking a hard look at whether or not there will be additional debt, and I’ll have an answer on that in the next couple of weeks.”
Washington, D.C. Post report late last month, the Biden Administration is still working on its policy, but is considering canceling at least $10,000 of student debt—only for borrowers who make less than $125,000 or $150,000. However, the White House is not yet open to sharing details on its proposed student debt program.
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“We’re not at the point where we have a final proposal or a final executive action or anything along those lines,” White House Press Secretary Jen Psaki said during a press briefing on May 2, noting that Biden wants to make sure the plan is “targeted to those graduates who have the greatest need.”
The strongest proponents of student debt cancellation have voiced concerns that eliminating $10,000 won’t make enough of a difference for borrowers. “Canceling $50,000 in debt is where you really make a dent in inequality and the racial wealth gap. $10,000 isn’t,” New York Rep. Alexandria Ocasio-Cortez told the Washington Post.
According to Warren’s analysis, eliminating $50,000 of debt from those earning less than $150,000 will wipe out 76% of borrowers. Eliminating $10,000 would eliminate 32% of borrowers.
“Bigger is better with higher levels of cancellation completely zeroing out debts for most of these borrowers, a disproportionate share of whom are Black and lack inherited household wealth,” Charlie Eaton, an assistant professor of sociology at the University of California Merced, said in a statement about the study.
Biden supported legislation that would eliminate $10,000 of student debt per person. This was during Biden’s presidential campaign. However, such a proposal will not win bipartisan support in Congress. Advocates asked Biden for executive action under his Higher Education Act authority.
Biden’s Administration extended through August the pandemic-related suspension on student loans payments to federal students. Advocates for debt forgiveness are pushing harder to get more. The attorneys general for seven states and Puerto Rico signed a letter on May 2, asking Biden to cancel student loan debt for “each and every borrower,” saying it would be “one of the most impactful racial and economic justice initiatives in recent memory.”
While white borrowers owe just over half of the country’s student debt balance, Black borrowers have been disproportionately burdened by the loans they took out in pursuit of higher education. Black college graduates are more likely to owe than their white counterparts and it takes them longer time to repay student loans. This is partly due in part, to the persistent wage gaps. A Brookings 2016 study found that Black graduates have nearly $25,000 less debt than white graduates four years after their graduation.
“Now is not the time for half measures, extensions or patchwork solutions. Now is the time for decisive action,” they wrote.
The reasons why some people oppose student loan forgiveness
Critics of student debt forgiveness say it will help too small a percentage of the population—15% of all U.S. adults and 34% of adults under 30 have some student debt, according to Pew Research Center. According to the non-profit Committee for a Responsible Federal Budget (CFRFB), debt cancellation could worsen inflation. Critics argue it discriminates against the most vulnerable Americans, those without college degrees and people with higher education. However, relief is available to individuals who are more educated and have higher incomes.
Republican lawmakers strongly condemned the plan. And many education experts also argue that canceling student loan debt, alone, won’t be an effective solution, if it’s not combined with measures that make college more affordable in the first place.
“It shovels vast sums towards an educated, affluent, and connected constituency, while doing nothing about the causes of the ‘crisis’ it is intended to alleviate,” Frederick Hess, director of education policy studies at the conservative American Enterprise Institute, wrote after Biden’s recent comments on possible debt cancellation.
An analysis done by the Georgetown University Center on Education & the Workforce found that college costs have increased 160% in the period 1980-1999, making it difficult for younger people to go to university and forcing them to incur more debt.
“While there are additional investments in public higher education and policy improvements that need to be made to ensure long-term college affordability and access, direct relief is needed now,” Denise Forte, interim CEO of the Education Trust, a nonprofit advocating for educational equity, said in a statement on Tuesday. “We urge the administration to increase the level of forgiveness and act in the coming weeks.”
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