President Joe Biden announced Wednesday morning that his long-promised student loan forgiveness is finally here. Though there are more details to come, the basics are simple: Those with student debt who didn’t receive Pell Grants will see $10,000 of their loans forgiven. Those who did receive the grants but still borrowed will have $20,000 taken off. No one earning $125,000 a year or more need apply.
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Additionally, the repayment pause has been extended one final time to December 31, 2022. For undergraduate loans, those payments can be capped at 5% of the payee’s monthly income. Canceling student debt and guaranteeing free college for everyone moving forward ranked high among Mr. Biden’s campaign promises before he took the Oval Office. Now – just a couple of months before the crucial midterm elections – he delivers, at least partially. Though headlines claiming “Biden cancels student loans” abound, it is, in fact, only a partial forgiveness for most indebted former students – and many aren’t happy. Even now, many demand more – from $50,000 per student to complete debt erasure.
The Penn Wharton analysis suggests that much of the relief will go towards higher earners, writing: “We estimate that forgiving federal college student loan debt will cost between $300 billion and $980 billion over the 10-year budget window, depending on program details. About 70 percent of debt relief accrues to borrowers in the top 60 percent of the income distribution.”
