There was never any real doubt about whether President Joe Biden would announce a new policy on student loan debts; the question was what the policy would entail and who’d benefit most. This morning, as NBC News reported, the White House started filling in the gaps.
President Joe Biden announced Wednesday that he would cancel $10,000 in federal student loans for millions of borrowers, following through on his campaign promise to address the burden of student debt. Borrowers who earn less than $125,000 a year, or $250,000 for couples who file taxes jointly, will be eligible for debt cancellation. Pell Grant recipients, who make up the majority of student loan borrowers, will be eligible for an additional $10,000 in debt relief, for a total of $20,000.
To help contextualize these figures, an American Prospect report, which described the developments as “good news,” explained, “As Matt Bruenig points out at the People’s Policy Project, canceling $10,000 zeros out the balances of about 31 percent of student loan borrowers, while cutting the balances of a further 21 percent by at least half. Add to that the doubled relief for Pell grant recipients, and the White House estimates that 20 million out of 43 million borrowers will have their full balance extinguished.”
By any fair measure, that’s an enormous number of beneficiaries, created by a president through executive action.
What’s more, the same policy goes further, extending the existing payment pause on federal student loans through the end of the year, and even more importantly, capping undergraduate loan payments at 5% of a borrower’s income. (The current cap is 10%.)
For good measure, let’s also note that the administration’s new policy guarantees that no borrower earning under 225% of the federal poverty level will have to make a monthly payment, while forgiving loan balances after 10 years of payments for those with original loan balances of $12,000 or less.
According to the White House, the benefit of the latter, will, among other things, “allow nearly all community college borrowers to be debt-free within 10 years.”
So, what’s the bad news? Plenty of voices on the left wanted an even more generous approach, while the Republican National Committee — which championed tax breaks for millionaires — has labeled the policy “a handout to the rich,” despite eligibility caps.
What’s more, there’s a larger policy conversation to be had about the incredibly high costs of higher education in the United States, and that discussion will continue outside of Biden’s new policy.
But for today, there’s ample reason to believe that the president’s new policy is a worthwhile step in a progressive direction. It’s also likely to be a popular move in an election year.
Two Democratic senators who’ve helped champion this issue — Senate Majority Leader Chuck Schumer and Sen. Elizabeth Warren — celebrated the developments in a joint statement, saying, “With the flick of a pen, President Biden has taken a giant step forward in addressing the student debt crisis by cancelling significant amounts of student debt for millions of borrowers. 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.”