By Mattie Cieplak, Staff Writer
President Biden announced that he will be canceling up to $10,000 in student debt and $20,000 for those with Pell Grants. Student debt cancellation was part of Biden’s 2020 campaign platform.
President Joe Biden announced last Wednesday, that he is forgiving $10,000 of student debt. Individuals making less than $125,000 a year for the 2020 or 2021 tax year will qualify. Pell Grant recipients can receive up to $20,000 in forgiveness.
The plan applies to undergraduate, graduate and Parent Plus loan borrowers. To qualify, loans must have been awarded before June 30.
Most who qualify will receive loan forgiveness automatically, as the Department of Education already has their income information. An application will be offered in early October for those whose information is not already on file or who are not sure they qualify.
This was not Biden’s only action in his announcement last Wednesday. In addition, he extended the loan payment freeze. The payment freeze, which was set to expire on Aug. 31, has now been extended through Dec. 31; payments will start again in Jan. 2023.
The student loan payment freeze began in March 2020 when former President Donald Trump signed the Coronavirus Aid, Relief and Economic Security Act (CARES Act)
The CARES Act was designed to prevent economic upheaval at the start of the pandemic. The act stopped regular required student loan payments and prevented interest from accruing on student loans. NBC News stated, “Trump later took executive action to extend the deferral period through Jan. 2021. […] Biden has issued five more extensions.”
In addition to the extension, the Biden Administration proposed “a new income-driven repayment plan” where, according to CNN, borrowers would “pay no more than 5% of their monthly income on undergraduate loans.” This would be a dramatic decrease from the previously required 10%.
Additional addendums the Biden administration hopes to implement include increasing the amount of income labeled as “non-discretionary income,” as well as the Biden administration itself cover unpaid monthly interest.
The two addendums would help reduce the amount of time it takes to pay back loans, as well as preventing borrower’s balances from growing if they are unable to pay.
Biden faced backlash from both Republicans and Democrats for the decision regarding loan forgiveness. Many Democrats were largely frustrated by the amount of loan forgiveness, saying it was not enough, while many Republicans claimed it unfair to forgive loans when the money is coming out of taxpayer dollars.
Some Democrats, like U.S. Rep. Tim Ryan, D-Ohio, argued against the loan forgiveness.
“As someone who’s paying off my own family’s student loans, I know the costs of higher education are too high,” Ryan said. “And while there’s no doubt that a college education should be about opening opportunities, waiving debt for those already on a trajectory to financial security sends the wrong message to the millions of Ohioans without a degree working just as hard to make ends meet,” Ryan said.
In response to Republican complaints, the White House tweeted amounts politicians were awarded from the Paycheck Protection Program (PPP) that was offered at the beginning of the COVID-19 pandemic.
This move to cancel loans, at least partially, has been anticipated since President Biden took office; he ran on student loan cancellation in his 2020 presidential campaign.
The announcement comes as Biden faces lagging poll numbers while Democrats fight to maintain control of the House and Senate in November’s midterm elections.