On April 25, President Joe Biden met with members of the Congressional Hispanic Caucus and senior White House officials to discuss President Biden’s student debt relief plan for college students. Tony Cárdenas, the Congressional Hispanic Caucus vice chair of member engagement’s representative, said that the meeting with the president included a “promising discussion” about “tackling student loan debt.”
During a press conference on April 28, President Biden told reporters at the White House, “I am considering dealing with some debt reduction. I am not considering $50,000 debt reduction [per borrower], but I’m in the process of taking a hard look at whether or not [there] will be additional debt forgiveness.”
College student debt is a prominent issue in the United States, especially with the rising costs of higher education and the financial repercussions of the pandemic. 43 million college students owe a total of $1.6 trillion worth of college debt, according to research conducted by the Education Data Initiative in 2022. In fact, the average federal student debt balance is around $37,000, and the average public university student borrows around $30,000 to attain their bachelor’s degree, also according to research conducted by the Education Data Initiative.
So, what would President Biden’s student debt relief plan entail, and what would it mean for college students? If you’re a college student, here’s what you need to know.
What is President Biden’s student debt relief plan?
During the 2020 presidential election, Biden made a promise to college students to cancel at least $10,000 of student loan debt per person — yet, according to sources close to the president, President Biden has allegedly never been big on student loan forgiveness. However, this aspect of his campaign is what helped him get elected, and particularly garnered him support from young Americans.
According to Cory Turner, an education correspondent for NPR, if President Biden chooses to forgive $10,000, it would “fully wipe out the debts for about 12 million people.”
While some Democrats are still pushing President Biden to cancel at least $50,000 of student debt per person, many argue that it appears more likely that the president will only excuse up to $10,000.
If the plan goes through, when will it go into effect?
According to Turner, the timing is unclear, even as pressure for action is monumentally increasing. “I was speaking with a few sources just the other day who said they feel like this is still a few weeks in the making, because it’s still complicated,” Turner told PBS. “And they need to make sure they get this right. Not only legally but also, logistically, you know, I don’t need to remind borrowers that they’ve been in a payment and interest moratorium for more than two years. And so doing anything of this scale at this point, is going to take some time.”
But why is pressure increasing now? For starters, paused loans granted by the CARES Act will be ending on Aug. 31. The CARES Act, which was signed into law in March 2020, includes emergency COVID relief benefits for college students, including paused student loan payments. The act has been extended numerous times due to pressure from student loan borrowers and financial aid advocates — in fact, it was originally supposed to end on May 1 before being extended to the August date.
Braxton Brewington, spokesperson for the Debt Collective, spoke to Forbes on the decision to unpause student loan payments. “Resuming costly student debt payments after a two year pause will likely go down as the worst political decision ever made by the Biden administration,” Brewington said. “At a time when costs for families are at a record high, the time to cancel student debt, narrow the racial wealth gap and boost our economy has never been more pressing.”
President Biden is also facing more heat now with the midterm elections fast-approaching, as many grassroots organizations and advocates are pushing him to fulfill some of his original campaign promises he made back in 2020.
Who will be eligible for student debt forgiveness?
While it’s not fully clear who will be eligible for student debt forgiveness, as President Biden’s student debt relief plan has not yet gone into effect, there are some predictions. According to CNN, borrowers who are earning less than $125,000 will likely be eligible for debt relief. CNN reported that earlier in May, Jen Psaki, the White House press secretary, said that President Biden is “using his campaign comments about providing student loan forgiveness to individuals making less than $125,000 a year as a frame for his current considerations.”
Students of color may also benefit most from President Biden’s student debt relief plan, if it goes into effect. According to research conducted by the Institute on Assets and Social Policy, Black college students are more likely to take on student debt, and a plan securing student debt relief would help minimize the racial wealth gap. However, Matt Chingos, the vice president of education data and policy at the Urban Institute, predicts that only 25% of canceled student loan dollars would go to Black borrowers if President Biden canceled up to $10,000 for those earning less than $125,000 a year.
How long will the plan last?
Unfortunately, this is also unknown — however, on April 28, President Biden said that he will announce more in the coming weeks regarding student loan forgiveness.
While much of President Biden’s student debt relief plan remains unclear, what is clear is that college student debt is a prevalent problem in the United States, and especially as the cost of higher education continues to rise and exacerbate racial wealth gaps. While they’re not a cure-all, student debt relief plans like President Biden’s are crucial in order to make college more accessible for all students — regardless of their race or socioeconomic status.