Over 44.5 Million federal student loan holders across the United States waited for President Biden’s actions as the August 31st pause neared its expiration. The Biden administration’s plan is here, which mostly aligns with his campaign promise to cancel up to $10,000 of federal student loan debt for each American.
Here are the specific details as noted by the New York Times and the administration:
- Student debt payment pause will be extended through Dec. 31st.
- Pell Grant recipients will receive up to $20,000 in student debt relief.
- Up to $10,000 of student debt relief will be given to other non-Pell borrowers.
- All relief will be limited to individuals who make less than $125K and families who jointly make $250K.
- An American Rescue Plan provision ensures Biden’s action will not be counted as taxable income.
- The loan forgiveness program applies to federal borrowers from undergraduate and graduate programs.
- More generous repayment structure with a cap of 5% of income if you have undergraduate loans (this will be huge for low-income earners, specifically)
- Loan balances will be forgiven after ten years, instead of 20 for loan balances of $12,000 or less.
Any student loan cancellation action is impressive, and this will provide much-needed relief to many Americans who are drowning in debt. As the administration points out, most Americans should see their student loans completely forgiven. The average amount of federal debt hovers around $28,950, so depending on your loan type, that may be less than half.
However, Black Americans hold as much as $52,000 of debt, so while this will make a dent, it won’t be enough to provide total needed relief. This action also does nothing to curb overall interest rates for graduate students, which can substantially add to monthly payments. Some lawmakers pushed for the Biden administration to cancel up to $50,000 of student loan debt per borrower. Still, due to potential legal challenges, the President called on Congress to take more concrete action. With a Senate makeup leaning to a slight Democratic majority, Republicans will stand in the way of that happening and have offered no policy plans to help Americans with this debt.
President of the NAACP Derrick Johnson did not seem happy with rumors of the forgiveness cap yesterday:
“If the rumors are true, we’ve got a problem. And tragically, we’ve experienced this so many times before,” NAACP President Derrick Johnson said in a statement on Tuesday. “This is not how you treat Black voters who turned out in record numbers and provided 90% of their vote to once again save democracy in 2020.”
Whether this is the start of a more significant movement to forgive all student debt, today is a step in the right direction. Especially considering this will help the people who need it the most. However, we still have to get to the root of why education is so expensive in the U.S. and the setbacks student loans place on Black and students of color if we want to make generational changes.