After much speculation, President Joe Biden announced his administration’s plans to cancel $10,000 in student loan debt for those earning less than $125,000 a year and up to $20,000 canceled for Pell Grant recipients. Set to expire on August 31st, the pause on student debt payments implemented in March 2020 will be extended through the end of December 2022.
“In keeping with my campaign promise, my Administration is announcing a plan to give working and middle-class families breathing room as they prepare to resume federal student loan payments in January 2023,” the president said in a Twitter post outlining some details of his plan.
In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023.
I'll have more details this afternoon. pic.twitter.com/kuZNqoMe4I
— President Biden (@POTUS) August 24, 2022
This means that as many as 1/3 of the 45 million borrowers, will see their debt wiped out entirely – and half of those who’ve defaulted on their student loan obligation will get a clean slate.
With $1.75 trillion in student loan debt, the average borrower owes just under $30,000. In the past three decades, college tuitions have more than doubled – from “$4,160 to $10,740 and from $19,360 to $38,070 at private nonprofit institutions,” according to Forbes – increasing the need for loans to finance higher education.
Critics of student loan forgiveness have claimed that canceling the debt will add to inflation worries, but payments have been paused for over two years which pretty much debunks that claim. Over 1.5 million borrowers have already received more than $32 billion combined in student debt relief since President Biden took office.
One in five Americans carries student loan debt, with a significant portion of the debtors having been taken advantage of by fraudulent schools and lenders. On August 16, the Department of Education announced that they “will discharge all remaining federal student loans that borrowers received to attend ITT Technical Institute (ITT) from January 1, 2005, through its closure in September 2016.”
That’s $3.9 billion in relief for over 200,000 former ITT students.
“It is time for student borrowers to stop shouldering the burden from ITT’s years of lies and false promises,” said U.S. Secretary of Education Miguel Cardona. “The evidence shows that for years, ITT’s leaders intentionally misled students about the quality of their programs in order to profit off federal student loan programs, with no regard for the hardship this would cause. The Biden-Harris Administration will continue to stand up for borrowers who’ve been cheated by their colleges, while working to strengthen oversight and enforcement to protect today’s students from similar deception and abuse.”
Canceling the debt of over 15 million Americans is a huge accomplishment for the current administration, and those crippled by the cost of higher education. President Biden continues to rack up the wins – and so do the American people.
Follow Ty Ross on Twitter @cooltxchick