On Wednesday, President Biden unveiled his plan to eliminate up to $10k in student loan debt for those earning less than $125,000 a year. The President's plan also calls for forgiving up to $20k in loans for recipients of Pell Grants. Eligibility will be based on reported income from 2020 & 2021 and comes after months of deliberation and debate, with some fearing it could increase inflation. Democrats in some circles also worry that the move may impact the upcoming midterm elections.
Republicans were also quick to capitalize on the plan. Nebraska Senator Ben Sasse released a statement saying in part,
“The President can spin it however he wants with Pell window dressing, but at the end of the day his debt forgiveness scheme forces blue-collar workers to subsidize white-collar graduate students,” Sasse says. “Instead of demanding accountability from an underperforming higher education sector that pushes so many young Americans into massive debt, the Administration’s unilateral plan baptizes a broken system. This deeply regressive action, which fails even to acknowledge that most debt is held by folks with graduate degrees, will do nothing to jumpstart the reform higher education desperately needs.”
Sasse previously served as a college president at Midland University and has long been an advocate for education reform.
Over 45 million people across America have student loans totaling roughly $1.6 trillion dollars. That's second only to mortgages in consumer debt, even topping auto loans and credit card debt.
According to initial estimates, roughly 27 million borrowers will qualify for a higher level of forgiveness. 60% of student loan recipients also received Pell Grants, with many coming from families earning less than $30k annually.
The total cost to taxpayers will depend on the number of applicants but will likely be between $300-$980 billion dollars over the next ten years.
The current moratorium on student loan payments will also end this year. The program started in March 2020 in response to the Coronavirus pandemic.
The Department of Education plans to open up the application process for loan forgiveness by the end of the year.