A week before the end of the moratorium on payments and interest, the Biden administration announced that $10,000 in debt for millions of borrowers would be canceled and the pandemic-era payment freeze — which has been extended seven times in the past two years — would continue until on December 31. Recipients of Pell Grants — a government program originally intended to help lower-income students pay for college but have only reduced tuition at many schools as the cost of higher education has skyrocketed — will be eligible to have up to and $20,000 in debts canceled in what administration officials described as a targeted measure aimed at ensuring that borrowers from lower-net-worth backgrounds get the most relief. Speaking Wednesday from the Roosevelt Room at the White House, Mr. Biden noted that the cost of public colleges and universities has tripled over the past four decades, even as higher education has become increasingly important. He recalled how his late father’s “biggest regret” was not going to college and how he didn’t want his son to suffer the same fate. “He’d say, ‘Joey, you’re going to be in college,’ and I’d say, ‘Dad, why does that matter?’ I mean, you could get fired if you’re in college.” Biden said his father replied, “But they can never take it away from you. They can never take away your education.” “My dad was like millions of parents across the country … he believed – as I did – that education was a ticket to a better life,” he said. The president said the rising cost of college and the high debt many students take on to attend have made it harder for Americans to buy homes, raise families or start their own businesses. He compared student debt relief to other pandemic-era economic measures that have supported small businesses and helped Americans with rent and food costs. “Our approach is why America’s economic recovery has been faster and stronger than any other advanced nation in the world. And now it’s time to tackle the burden of student debt in the same way,” he said. Mr. Biden said the federal government would resume collecting student loan payments on Jan. 1, 2023, and end the collection freeze imposed along with other relief programs, but stressed that borrowers would benefit from debt relief at the same time. as a result of Actions. “By resuming student loan payments at the same time as providing targeted relief, we are taking a fiscally responsible course,” he said. He added that “independent experts” believe both actions will provide “real benefits” to American families without contributing to inflation. About 43 million federal student loan borrowers would be eligible for relief, including 20 million who are eligible to have their debts completely written off, according to a senior White House official who briefed reporters on Biden’s plans. The White House estimates that the vast majority of relief through the administration’s latest maneuver will go to people with annual incomes below $75,000, and that 45 percent of student loan borrowers will have their debt completely eliminated under Biden’s proposal. “That’s 20 million people who are going to start moving on with their lives. All of this means that people can finally start to get off that mountain of debt, get over rent and utilities, finally think about buying a house or starting a family or starting a business,” the president said. Mr. Biden also announced a proposal to reduce the amount of discretionary income used to calculate payments made as part of income-based repayment plans from 10 percent of discretionary monthly income to 5 percent. The senior official explained that a “typical single construction worker making $38,000 a year with a construction management credential” would see payments drop to $31 a month compared to the $147 they pay now. They added that borrowers will be allowed to allow the Department of Education to automatically access their income tax information so they don’t have to correct their income each year. “Once a borrower is registered, it will be much easier to stay registered and get credit due,” the official said. Mr. Biden’s announcement fulfills a campaign promise he did more than two years ago, when he promised to cancel $10,000 of student loan debt per borrower if elected, even though debt relief advocates and progressive lawmakers urged him to cancel all debt and drop credit check barriers. resources to general relief measures. In November 2020, the president called on Congress to “immediately” provide some relief to millions of borrowers suffering from mounting debt. “[Student debt is] holding people up” he said then. “They are in real trouble. They have to make choices between paying their student loans and paying the rent.” More than 40 million Americans hold about $1.9 trillion in student loan debt, most of which is wrapped up in federal loans. The average balance is $37,667, according to the Education Data Initiative. Starting in March 2020, with the passage of the CARES Act by Congress, most borrowers did not have to make monthly payments on their student loan debt, with interest rates set at zero. That pause has been extended seven times, including four times by President Biden, most recently in April. Biden said he understands that many will criticize his administration for not canceling enough student debt, while some will want it to do nothing at all. But he called the plan “responsible and fair” and hit back at Republicans who criticized the idea of student debt relief as a handout to deserving elites, noting that none of his critics batted an eye when business loans were forgiven in its other programs pandemic era. “I will never apologize for helping the American people … especially not the same people who voted for the $2 trillion tax cut that mostly benefited the wealthiest Americans and the biggest corporations, that slowed down the economy, didn’t do much for the economy to grow, and was not paid and accumulated this huge deficit,” he said. “Just as we never apologized when the federal government forgave nearly every cent of more than $700 billion in loans to hundreds of thousands of small businesses across America during the pandemic.” “No one complained that these loans caused inflation. Many of these people in small businesses work in middle-class families. They needed help and it was the right thing to do,” he said.
