“Today, President Biden announced that his administration will cancel up to $10,000 of debt for all student borrowers with federal undergraduate, graduate, and parent loans (not including commercially-held FFEL loans) who earned annual incomes less than $125,000 ($250,000 joint filing), as well as up to $20,000 of debt for borrowers whose incomes fall below those thresholds and received a Pell Grant to help them pay for college. The Administration is also extending the pandemic repayment pause through the end of 2022. The Administration further announced a plan to cut monthly payments in half for borrowers enrolled in income-driven repayment (IDR), protect more of their income from the monthly payment calculation, eliminate accruing interest for borrowers whose income-driven payments do not fully cover interest and reduce the repayment period from 20 years to 10 years for borrowers with low balances ($12,000 or less). These actions build on recently detailed plans to ease the path out of default for millions of borrowers, as well as efforts to more fully deliver on promised debt relief for defrauded borrowers and borrowers seeking Public Service Loan Forgiveness (PSLF) and borrowers enrolled in IDR. Collectively, these actions have resulted in the cancellation of over $30 billion in outstanding student debt held by more than 1.5 million borrowers.
“Canceling billions of dollars of student loan debt for millions of student loan borrowers is an overdue acknowledgement that our higher education system relies far too heavily on students taking on debt, and that existing repayment protections have been too difficult to access and navigate. Today’s actions on student debt are significant steps toward addressing unsustainable student debt burdens for millions of existing borrowers. But systemic reforms are required to make college accessible and affordable for all students, and to stop this debt from continuing to grow.
“Effective implementation in the coming months will be critical to provide the greatest relief to the borrowers most in need. Together with the Fresh Start program, today’s actions will help protect borrowers from a punitive student loan default system. Still, students continue to desperately need a reformed higher education system that does not require taking on significant debt in the first place. Federal policymakers should now take the opportunity to enact reforms that break the cycle of unsustainable student debt that has deepened racial and economic inequities in access to college and in our society.
“TICAS urges policymakers to create a path to debt-free college at the federal level; increase need-based student grant aid at the federal and state levels to reduce the need for students to take on debt; implement and protect rigorous protections for student borrowers against colleges that saddle them with large debt without delivering corresponding earnings gains; strengthen income-driven repayment plans, and reform the punitive consequences for students who face years of hardship in servicing their debt. That work is more essential than ever.”