In keeping with his campaign promise, President Joe Biden announced unprecedented new measures on Wednesday to address student loan debt, including extending the payment freeze until the end of the year and erasing up to $20,000 in student loan debt for millions of borrowers.
Borrowers who received Pell Grants, which are awarded to students from low- and middle-income families, may be eligible for up to $20,000 in student loan forgiveness. Loan forgiveness of $10,000 is available to those who did not obtain Pell Grants but earn less than $125,000 annually.
The Biden administration will also extend the payment moratorium on the majority of federal student loans “one last time” through December 31, 2022.
“Education is a ticket to a better life but over time, that ticket has become too expensive for too many Americans,” President Biden said during a White House press briefing.
“All this means that an entire generation is now saddled with unsustainable debt in exchange for an attempt, at least, at a college degree. The burden is so heavy that even if you graduate, you may not have access to the middle-class life that the college degree once provided.”
Biden also stated that the plan will assist 95 percent of borrowers, or approximately 43 million Americans. Over 60 percent of those are Pell Grant recipients.
Is It Enough?
While the new proposal delivered historic new steps to address student loan debt, left-leaning groups and students argue that the President ought to have kept his promise made during his election campaign to wipe out all student debt.
Allie Holler, a graduate student at the University of Pittsburgh who has about $80,000 in debt, told Pittsburgh Post-Gazette that the relief measure is not enough for her.
“I hate to be one of the people saying that, because it looks like a lot of people are happy about this plan. But I just feel like more could have been done, and $10K was the bare minimum.”
Many progressive lawmakers and organizations assert that addressing economic and racial inequality requires waiving $50,000 of debt, citing statistics that Black and other non-white borrowers end up with greater loan debt than their white counterparts.
Others believe eliminating $10,000 in debt for each borrower will lead to higher inflation, defeat the Democrats’ claimed intention with their Inflation Reduction Act, and have little to no impact on the wealth difference between races.
The plan “would unnecessarily provide tens of thousands of dollars to many high-income households in a way that goes well beyond even what he promised in the heat of a Democratic primary when the problem facing the country was low inflation — not high inflation,” Jason Furman, chief economist for former President Barack Obama, told the New York Times.