Biden’s Student Loan Forgiveness Plan: Who’s Eligible?

In a long-awaited announcement, President Joe Biden said Wednesday that his administration would forgive $10,000 in student loan debt for borrowers who earn less than $125,000 a year, or $250,000 for taxpayers who file jointly. Additionally, Biden said many students from low-income backgrounds will receive an additional $10,000 in aid.

Biden’s unprecedented maneuver is expected to affect more than 43 million borrowers and even wipe out loan repayments for some. But that probably won’t solve some of the bigger problems with student debt, namely the cost of college and the large sums borrowed by some to pay for the cost of college. Nationally, student debt has soared to more than $1.7 trillion.

US Secretary of Education Miguel Cardona said in a press release Wednesday that student loan debt has hampered the ability of many Americans to achieve their dreams, including buying a home, starting a business or supporting a family. ‘a family. The ministry also announced other changes to facilitate loan repayment.

“Getting an education should set us free; not tie us down,” Cardona said. “We are providing targeted relief that will help ensure that borrowers are not put in a more difficult financial situation because of the pandemic, and restore confidence in a system that should create opportunities, not a debt trap. .”

Biden ran on canceling at least $10,000 in student loan debt and faced pressure from advocates to cancel far more. He has repeatedly delayed a decision amid heated debates over whether debt cancellation would advance economic justice or disproportionately benefit top-earning Americans at a time when the working class is struggling. .

The plan offers more help to students who started with less. About 27 million Pell Grant recipients are expected to be eligible to receive up to $20,000 in loan forgiveness. Pell Grants cover a portion of tuition for students from low-income families, with the vast majority of eligible students from households earning less than $60,000 per year.

Kyle Southern, associate vice president of higher education quality at the Institute for College Access and Success, said there were two sides to the announcement. It is life changing especially for borrowers from low income backgrounds. But a broader conversation about student debt needs to happen, especially when it comes to which students are leaving college with debt.

The cap on the amount of debt that will be forgiven means that white borrowers will see more of their debt relieved than black and Latino borrowers from low-income backgrounds, who on average owe more than white students upon graduation. the university.

The announcement is expected to fuel new conversations about how to invest in the Pell Grant program and support for institutions that serve large numbers of students of color.

“We are very aware that we have yet to break the cycle that fuels these types of debt-based approaches to higher education,” Southern said.

In a recent CNN opinion piece, Derrick Johnson, National President and CEO of the NAACP, said “$10,000 relief is like pouring a bucket of water on a wildfire.” for black Americans who owe almost double the student debt that white Americans do – nearly $53,000 on average for black students.

Shanique Broom, 31, who lives in Denver, sees the Biden plan as a drop in the bucket. She owes more than $300,000 after attending Central Michigan University for her bachelor’s and master’s degrees and the University of Denver for her doctorate.

A smiling woman in a white sweater sits on a bench outdoors

Shanique Broom

Jason Gonzales/Chalkbeat

She is happy with the relief, but wants students from low-income backgrounds to be eligible for more debt relief.

“I wanted something more equitable,” said Broom, who works in education policy. “But realistically, with the way this government, this administration, just like our country has operated, I didn’t even expect that.”

She said students whose families have fewer resources have to borrow more just to cover living expenses while in college.

“It’s like you were damned if you did and you were damned if you didn’t,” Broom said. “I spent my whole life trying to live that American dream of getting my degree, but I got into debt. My future is clouded.

Biden and his administration have also received praise for the debt cancellation plan. Felipe Vieyra, who graduated from the University of Denver in 2012 with more than $60,000 in student loan debt, said he has already texted friends about his excitement. The 32-year-old said the $10,000 the government will write off should reduce his student loan debt to $20,000. He spent years reducing his debt on his own.

At one point he lived in a storage room for $200 a month because he couldn’t afford another rent. He said the $20,000 he still owes would seem more surmountable.

“It gives me more control,” he said.

He added that he wasn’t sure the ad helped students of color see college as more appealing. The percentage of students who enroll directly from high school to college has declined. Many of those choosing jobs instead cite an aversion to debt and higher pay for entry-level jobs.

A recent report from the Institute for College Access and Success showed that half of all Colorado students graduating from college in 2020 had debt, averaging $26,424. In 19 other states, the average debt for college graduates was over $30,000, while in six states it averaged over $35,000.

“It’s still expensive to go to college,” Vieyra said. “And that has to be resolved one way or another.”

Colorado Department of Higher Education Commissioner Angie Paccione said debt relief is especially helpful for students who went to college but did not graduate. Paccione said that in Colorado there are 700,000 people who went to college but didn’t graduate, “meaning they probably have at least half the debt they’ve accumulated, but they don’t have a degree that helps them maximize their earning potential.” .”

She said she expects unforeseen and as yet unknown consequences and political reactions, especially from those who have already repaid their loans. But this generation, she says, “suffers disproportionately more than it cost me to pay”.

“What I’m afraid of is that there will be people who will see this as a handout instead of a helping hand,” she said.

The administration plans to release more details about the student loan forgiveness plan, specifically how to apply for loan forgiveness.

Southern said he hopes the administration communicates clearly how students can benefit from debt forgiveness and that federal officials “automate as much as possible.”

We have to be very vigilant to make sure this program is widely known and easy for people to access the benefits they are entitled to,” he said.

The Biden administration’s announcement also included several other actions related to student loan repayment.

It will extend the pause on repayments, interest and collections until December 31 for borrowers who still owe payments beyond cancellations. The pause extends the deadline put in place at the start of the pandemic.

The ministry is also proposing to reduce monthly payments for low- and middle-income borrowers.

The proposal would halve — from 10% to 5% of discretionary income — the amount borrowers have to pay each month on their undergraduate loans. The rule would also cancel loan balances after 10 years of payments — instead of 20 years — for borrowers with original loan balances of $12,000 or less. And it would reduce interest as long as borrowers make their payments on time.

Borrowers like Broom with high student loan debt will likely get the most relief not from the $20,000, but from income repayment changes. Still, she expects her payments to still be in the thousands of dollars a month, akin to paying a second mortgage, she said.

The administration is also planning changes that will make it easier for borrowers working in nonprofit jobs or in the military to use the civil service loan forgiveness program. And the administration said it is taking steps to hold private schools accountable for high student debt and will release an annual watchlist of programs that contribute to high student debt.

The list will name the programs with the highest debt levels in the country. The ministry will request improvement plans from these colleges and this will outline how the college intends to reduce debt levels.

Jason Gonzales is a journalist covering higher education and the Colorado legislature. Chalkbeat Colorado partners with Open Campus on higher education coverage. Contact Jason at

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