Biden Announces Student Loan Forgiveness Plan to Mixed Reactions
The long-awaited, controversial decision has triggered high praise from progressives, but criticism from GOP lawmakers and even some Democrats.
President Joe Biden announced his administration’s long-awaited student loan forgiveness plan Wednesday, saying it will forgive $10,000 in student loans for borrowers who earned less than $125,000 during the pandemic. People who received Pell Grants, grants to low-income students, while they were enrolled in college will be eligible to have $20,000 in debt forgiven, reports Vox.
The move will be enough to wipe out some student debt entirely: 15 million of the 43 million people with federal loans owe less than $10,000, and those borrowers are typically the most likely to fail to pay back their loans. In all, the plan will eliminate student debt for about 20 million people, according to an analysis provided by the Education Department, and decrease monthly payments by an average of $250 for borrowers with a remaining balance who are on standard 10-year payment plans. Biden’s announcement came after months of speculation and a pandemic pause on student loan payments that lasted more than two years.
Excerpt from Vox: The move will be enough to wipe out some student debt entirely: 15 million of the 43 million people with federal loans owe less than $10,000, and those borrowers are typically the most likely to fail to pay back their loans. In all, the plan will eliminate student debt for about 20 million people, according to an analysis provided by the Education Department, and decrease monthly payments by an average of $250 for borrowers with a remaining balance who are on standard 10-year payment plans. Biden’s announcement came after months of speculation and a pandemic pause on student loan payments that lasted more than two years.
According to the Wall Street Journal, President Biden’s student loan forgiveness plan could be the latest legal test of the administration’s emergency executive powers during the pandemic. If the White House plan is challenged in court, its lawfulness could hinge on the education secretary’s powers under a 2003 federal statute that gives the head of the Education Department the capability to waive or modify federal student-loan provisions during war or a national emergency.
Excerpt from the Wall Street Journal: In legal memos, the Biden administration has argued the statute, the Higher Education Relief Opportunities for Students Act, gives the education secretary sweeping authority to cancel student loans to address financial hardship arising out of the Covid-19 pandemic. “The Secretary’s authority can be exercised categorically to address the situation at hand; it does not need to be exercised ‘on a case-by-case basis,’” wrote Lisa Brown, general counsel for the Education Department, in a memo released Wednesday. That interpretation of the statute could raise novel questions in court, and is a change from the Trump administration, which believed Congress never gave the executive branch such blanket authority.
Regardless of its legal authority, the implementation of President Biden's widespread, income-targeted student loan forgiveness is shaping up to be a bureaucratic challenge for the Department of Education, writes Axios.
Excerpt from Axios: The agency doesn't have income data for most of the 43 million Americans eligible for forgiveness, meaning around 35 million people — including Pell Grant recipients — will have to attest that they makes less than $125,000 per year and apply for relief. StudentAid.gov, the government’s financial aid website, experienced significant delays Wednesday and Thursday after it was inundated with people seeking information on loan forgiveness. The White House doesn't know exactly how many eligible borrowers will actually end up applying for loan forgiveness — or how much it will cost. The White House is asking them to sign up for updates from the Education Department to receive further info on how to apply.
According to the Hill, recent polling suggests the majority of American voters may be in favor of the Biden administration’s decision to forgive billions of dollars of student loan debt for low- to middle-income borrowers.
Excerpt from the Hill: A recent national poll conducted by progressive think tank Data for Progress just before Biden’s announcement found 60 percent of 1,425 respondents agreed the federal government should eliminate all or some student loan debt for every borrower, compared to 34 percent who said the government should not forgive the loans and 6 percent who said they didn’t know. The poll was conducted Aug. 19-21 online and has a margin of error of plus or minus 3 percentage points. Along party lines, 81 percent of Democrats were in favor of canceling at least some student loan debt compared to 45 percent of Republicans who said the same. The poll found more than half of past student loan borrowers and voters who never borrowed student loans believed some or all student debt should be eliminated.
Meanwhile, the White House is not taking criticism of the decision to forgive student debt lying down. After some Republican lawmakers tweeted or went on broadcasts to condemn the decision, the White House Twitter page responded by quote tweeting their comments – and sharing just how much each of them benefited from having their Paycheck Protection Program loans forgiven.
The Brookings Institution conducted an in-depth study of the issue in January 2020 since it was a big issue in the 2020 presidential campaign. According to Brookings, there’s a lot of student debt —about $1.5 trillion, up from $250 billion in 2004. Students loans are now the second largest slice of household debt after mortgages, bigger than credit card debt. About 42 million Americans (about one in every eight) have student loans, so this is a potent issue among voters, particularly younger ones.