The Biden-Harris administration announced on Wednesday its much-anticipated plan to cancel student loan debt for millions of borrowers after more than a year of deliberations.
President Joe Biden delivered remarks at the White House on Wednesday afternoon to unveil his administration’s plan to provide up to $20,000 in debt cancellation to Pell Grant recipients and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers who earn less than $125,000 per year or households earning less than $250,000 are eligible for debt cancellation.
The White House estimates that 90 percent of relief dollars will go to borrowers earning less than $75,000 per year. An official said borrowers will likely have to submit an application to verify their salary, but thereafter would likely see “immediate” cancellation.
Additionally, the administration is extending the pause on student loan debt payments for a final time through Dec. 31 to provide borrowers “a smooth transition back to repayment,” according to the White House.
The White House announced other plans to protect low-income borrowers by capping monthly payments for undergraduate loans at 5 percent of a borrower’s discretionary income. It also said it plans to fix what it called a “broken” Public Service Loan Forgiveness (PSLF) program by proposing a rule that borrowers who have worked at a nonprofit, in the military, or federal, state, tribal, or local government, receive appropriate credit toward loan forgiveness.
During a White House background call on the announcement, a senior official noted that the burden of student debt falls disproportionately on Black borrowers. According to one analysis, the Biden official noted, Black borrowers still owe 95 percent of their original student loan debt 20 years after taking on the debt.
“Black students are more likely to have to borrow for school, more likely to take out larger loans and more likely to receive Pell Grants,” the senior official said. The official projected that even before applying the additional $10,000 in debt forgiveness for Pell Grant recipients, the typical Black borrower will “see their balance cut nearly in half, and more than one in four Black borrowers will see their balance forgiven altogether.”
The White House’s announcement falls short of demands from some members of Congress and advocates who have called for $50,000 in student loan forgiveness. However, President Biden has consistently supported only canceling $10,000 in debt. The $10,000 versus $50,000 amount has been a point of contention. Even after reports indicated Wednesday’s announcement, some Black leaders continued to express dissatisfaction, arguing that $10,000 was not enough to provide relief for Black borrowers.
“If student debt repayments can be paused over and over and over again, there’s no reason why the President cannot cancel a minimum of $50,000,” tweeted NAACP President Derrick Johnson.
Johnson pointed to the Biden-Harris campaign promise to “forgive all undergraduate tuition-related federal student debt from two- and four-year public colleges and universities and private HBCUs and MSIs for debt-holders earning up to $125,000.”
Johnson said Biden’s “decision on student debt cannot become the latest example of a policy that has left Black people, especially Black women, behind.” He added, “This is not how you treat Black voters who turned out in record numbers and provided 90 percent of their vote to once again save democracy in 2020.”
But members in Congress who were staunch advocates for $50,000 in student loan debt cancellation were less critical.
Rep. Ayanna Pressley (D-Mass.), who has been a leading voice in Congress to cancel a minimum of $50,000, released a statement Wednesday applauding President Biden’s announcement. The congresswoman said the latest White House move “will change lives for the better.”
“We urged the President to make good on his promise to cancel student debt and bring meaningful relief to our families in this moment of overlapping crises—and today he acted,” said Pressley. “By reducing this unjust debt burden, this decision will help millions of people to make ends meet, build generational wealth, grow their families, purchase homes, and more. I urge President Biden and Secretary Cardona to ensure this relief is implemented as swiftly and efficiently as possible.”
Senate Majority Leader Chuck Schumer and Sen. Elizabeth Warren, who both also called for $50,000 in debt forgiveness, released a joint statement saluting the president.
“The positive impacts of this move will be felt by families across the country, particularly in minority communities, and is the single most effective action that the President can take on his own to help working families and the economy,” Schumer and Warren said.
“Make no mistake, the work—our work—will continue as we pursue every available path to address the student debt crisis, help close the racial wealth gap for borrowers, and keep our economy growing.”
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