After months of intense debate, Biden announces his plans for forgiving student debt for borrowers which includes forgiving $10,000 for borrowers who make less than $125,000 per year and extending the payment freeze until the end of the year.
In a tweet, Biden stated that the amount of forgiveness will be higher for low-income borrowers who had Pell Grants while in college. They will receive $20,000 in student loan forgiveness.
Biden has been under the microscope of public scrutiny and criticism for his long-waited decision of wider student debt relief for more than 43 million Americans just days before the Aug 31 deadline to announce the extension of the loan payment moratorium.
The president made good on his campaign promises to address student debt, but fell short of the $50,000 debt relief that several of his fellow Democrats were pushing for.
“If student debt repayments can be paused over and over again, there’s no reason why the President cannot cancel a minimum of $50,000,” said NAACP President Derrick Johnson in a tweet.
So far, his administration has canceled nearly $32 billion in outstanding federal student debt by expanding existing forgiveness programs for disabled borrowers, public sector workers, and students who were defrauded by for-profit colleges.
NAACP Image Award nominated author, publicist, and entrepreneur Gwen Richardson said this plan does nothing for future college-bound students and mocks the efforts her daughter has made to pay off $43,000 in two years.
“It may increase borrowing levels as these [incoming] students will assume they’ll have part of their debt wiped out.”
Ronenia Jenkins, a senior benefits administrator, said she is grateful for the reduction even though she prefers more.
“I have $147,000 in debt from three degrees which provided me with a better quality of life,” she said. “I have no problem repaying debt back, but their student loan system is and have been rigged for some time when trying to eliminate higher debt.”
The U.S federal debt is now at $1.6 trillion and have increase significantly throughout the years. Advocates for complete student debt cancelation argue that it would help close the racial wealth gap because Black student tend to borrow larger amounts of debt and take a longer time to pay them off compared to their white peers.
According to a new CNBC poll, 59 percent of Americans believe canceling student loan debt will make inflation worse. Some borrowers say they would not change their spending habits if their college debt – or a portion of it- is canceled.
The Department of Education says it is working on new regulations to permanently improve forgiveness programs that are already in place. They also announced plans to protect low-income borrower’s by capping monthly payments for undergraduate loans at 5 percent of a borrower’s discretionary income.
