Breaking Down Biden’s Student Loan Forgiveness Plan

The president outlined a framework comprised of three key factors aimed at assisting the nation’s neediest borrowers.

U.S. President Joe Biden speaks on student loan debt at the White House on August 24, 2022, in Washington, D.C. Credit: Getty Images
U.S. President Joe Biden speaks on student loan debt at the White House on August 24, 2022, in Washington, D.C. Credit: Getty Images

Today, President Joe Biden announced a highly-anticipated plan to combat the nation’s student debt crisis. Among the plan’s most important top line actions is $10,000 in federal student loan forgiveness for individuals making less than $125,000 per year, and up to $20,000 in forgiveness for Pell Grant recipients.

The president teased the full plan today, in a short video provided exclusively to NowThis. Shortly thereafter, Biden held an afternoon press conference where he discussed his administration’s new actions in full.

Biden opened by sharing a personal anecdote about his own father’s inability to attend college or secure money for his children's education. He then went on to discuss how student loans pose a direct hindrance to many in the country’s middle class, inhibiting them from purchasing homes, starting a small business, or creating a retirement fund. “All this means, people can start to finally crawl out from under that mountain of debt. To get on top of their rent and utilities. To finally think about buying a home or starting a family or starting a business,” Biden said, in defense of his new measures.

In his remarks, Biden acknowledged several key statistics pertinent to the debt discussion:
 

  • The cost of four year private and public college has nearly tripled since 1980.
  • Federal support for this increase is grossly lacking, as Pell Grants — grants issued to low-income students with exceptional financial circumstances — only cover around one-third of a 4-year public college degree.
  • Per the Department of Education, most undergraduate students graduate college with approximately $25,000 in debt.
  • Nearly one-third of borrowers have debt but no degree, after being forced to forgo their education due to financial strain.
  • The debt crisis disproportionately affects Black student borrowers.


Today’s actions on student debt relief are comprised of three key factors aimed at assisting the nation’s neediest borrowers.

First, the admin says it will streamline debt relief to address the financial effects of the COVID-19 pandemic by canceling up to $10,000 in debt for individual students earning less than $125,000 per year, or $250,000 as a family. Pell Grant recipients who meet that criteria are eligible for an additional $10,000, for $20,000 in loan forgiveness total. Biden also announced he is extending the moratorium on student loan payments until December 31— but explicitly stated this will be the last extension of its kind.

Biden also said his administration will also be taking additional actions to improve the Public Student Loan Forgiveness (PSLF) program, reduce the amount borrowers have to provide in monthly payments (from 10% to 5% of their discretionary income). His Department of Education will also be strengthening measures that hold universities accountable for “ripping off students” and inflating the overall costs of college.

First, the admin says it will streamline debt relief to address the financial effects of the COVID-19 pandemic by canceling up to $10,000 in debt for individual students earning less than $125,000 per year, or $250,000 as a family. Pell Grant recipients who meet that criteria are eligible for an additional $10,000, for $20,000 in loan forgiveness total. Biden also announced he is extending the moratorium on student loan payments until December 31— but explicitly stated this will be the last extension of its kind.

Biden also said his administration will also be taking additional actions to improve the Public Student Loan Forgiveness (PSLF) program, reduce the amount borrowers have to provide in monthly payments (from 10% to 5% of their discretionary income). His Department of Education will also be strengthening measures that hold universities accountable for “ripping off students” and inflating the overall costs of college.

 

Many Democrat lawmakers publicly celebrated news of Biden’s announcement. Sen. Elizabeth Warren (MA) and Senate Majority Leader Chuck Schumer (NY) released a joint statement expressing their support of the plan. “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,” they wrote. “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.”

Rep. Ayanna Pressley (D-MA), who, along with Warren, introduced a resolution in February to cancel up to $50,000 in student debt, took to Twitter following the announcement to share her thoughts. “President @JoeBiden just canceled student debt. To every organizer who fought so hard, this victory is yours. This is going to change and save lives.”