By Terrance Turner
Aug. 24, 2022
President Joe Biden announced his plans for student loan forgiveness today, in a live speech that began at roughly 1:50 pm CST. (News of the announcement broke yesterday, as #CancelStudentDebt became the No. 1 hashtag on Twitter.) As expected, Biden today addressed both student loan forgiveness and an extension of the moratorium on student loan payments.
After months of lobbying from advocates and from members of Congress, Biden is poised to fulfill a campaign promise by forgiving student loan debt of up to $10,000 for those who make less than $125,000 a year. (This could affect up to 40 million borrowers, according to Forbes.) Biden campaigned in 2020 on a promise to cancel $10,000 in student loan debt. This announcement marks the fulfillment of that promise, after months of lobbying from both activists and members of Congress.
The president also announced a final extension of the freeze on loan repayments. The pause began in March 2020 amid the COVID-19 pandemic. Biden has extended the pause four times, most recently in April. The pause is scheduled to expire on Aug. 31. But White House officials are now leaning towards one last extension, per CNN. The president confirmed that news today by saying that the loan freeze will last until the end of December.
Speaking from the Roosevelt Room of the White House today, Biden delivered the news.
“Here’s the deal: the cost of education behind high school has gone up significantly. The total cost to attend a public four-year university has tripled – tripled! – in 40 years,” Biden said. “Instead of properly funding public colleges many states have cut back support for their state universities, leaving students to pick up more of the tab.
And 50 years — for 50 years — Pell grants have been a key way for the federal government to help lower-income families, particularly those earning less than $60,000 a year, to send their kids to college. Those Pell grants used to cover 80% – 80% – of the cost of going to a public four-year college. Today Pell grants cover roughly 32%. That’s 1/3 of the cost as opposed to before. It matters.
“My dad’s greatest regret was that he never got to go to college, and my dad was a very well with man particularly in history. But it was a great regret. He always said, “Joey, you’re going to be a college man.” But I’d say, “Dad, but what does that matter? You can still get fired if you’re a college man.’ He said, ‘Yeah, but they can never take it away from you. They can never take your education away.'”
“Education is a ticket to a better life. But over time, that ticket has become too expensive for too many Americans. All this means is the entire generation is now saddled with unsustainable debt in exchange for an attempt, at least, at a college degree. The burden is so heavy that even if you graduate, you may not have access to middle-class life that a college degree once provided. Most people can’t qualify for a mortgage to buy a home because of the debt that they continue to carry. It’s much too high — they can’t come up with a down payment anyway. A lot of folks are even putting off starting families because of the cost. And the dream is starting and owning your own business is just way off in the distance.”
Biden added: “Many of you had to leave school because the financial strain was much too high. About a third of the borrowers have debt but no degree — the worst of both worlds. The burden is especially heavy on Black and Hispanic borrowers, who, on average, have less family wealth to pay for it. They don’t own their homes to borrow against to be able to pay for college. And the pandemic only made things worse.”
Biden recalled the administration providing loans for small businesses and providing stimulus payments for Americans struggling to make ends meet. Remember those lines you guys had all filmed, of cars — decent-looking cars, not jalopies; they were nice cars — just waiting for a box of food to be put into a trunk? In the United States of America, waiting for food to be put into a trunk?”
Just as they assisted with rent and housing and food, Biden said, the administration will now work similarly with student loans. “Working closely with the Secretary of Education,” Biden said, “here’s what my administration is going to do to provide more breathing room for people so that they’re less burdened by student debt and quite frankly to fix the system itself which when we came in, we both acknowledged was broken.
“There are three key factors,” Biden began. “First, we wound down pandemic relief programs like the ones for unemployment assistance, and small businesses. It’s time to do the same for student loans. Student loan payment pause is going to end. It’s going to end. I’m extending it to December 31st 2022, and it’s going to end at that time. It’s time for the payments to resume.
Second, in my campaign for president, I made a commitment that we’d provide student debt relief, and I’m honoring that commitment today. Using the authority Congress granted the Department of Education, we will forgive $10,000 in outstanding federal student loans. In addition, students who come from low-income families, which allow them to qualify to receive a Pell Grant, will have their debt reduced $20,000.
Both of these targeted actions are for families that need it the most: working- and middle-class people, hit especially hard during the pandemic, making under 125,000 a year. You make more than that, you don’t qualify. No high income individual or no high-income household on top of the 5% — that’s top 5% of income, by the way — will benefit from this action. Period.”
“95% of the borrowers can benefit from these actions. That’s 43 million people. Of the 43 million, over 60% are Pell Grant recipients. That’s 27 million people who will get $20,000 in debt relief and 45% can have their student debt fully canceled. That’s 20 million people who can start getting on with their lives. All this means people can start finally crawl out from under that mountain of debt, to get on top of their rent and utilities, to finally think about buying a home or starting a family starting a business. And by the way, when this happens the whole economy is better off.”
In the coming weeks, the Department of Education will lay out a short and simple form to apply for this relief,” Biden said. “By resuming student loan payments at the same time as we provide targeted relief, we’re taking an economically responsible course. As a consequence, about $50 billion dollars a year will start coming back into the treasury because of the Resumption of debt.” Biden cited independent experts that argue that the combination of these two actions will assist familiies and minimize the risk of inflation.
“Third thing: we’re fixing the student loan process itself […] We’re proposing to make what’s called an income-driven repayment plan simple and fair, and here’s how: no one with an undergraduate loan today or in the future, whether at a community college or a four-year college, will have to pay more than 5% of their discretionary income through paying their loan. That’s income after you pay things like housing, food and the like. You currently play 10%. We’re cutting that in half to 5%, and after you pay your loan for 20 years, your obligation will be fulfilled — if it hadn’t already been fulfilled. Meaning you won’t have to pay anymore. Period.”
“We’re also fixing what’s called — and this has been the bane of driving me crazy, when I was out of office — the Public Service Loan Forgiveness program. This program forgives student loans to encourage those students who have those loans if they go into public service. Think of the millions who are public school teachers, local police officers, workers at local charities, members of the military, and the National Guard, and so many more.
Think of the folks who work for federal, state, local, travel, governments keeping essential services going, responding to national disasters,” he said. The program is designed to wear if you serve in one of these jobs,” he said, “and make your loan payments for 10 years — even if it’s not consecutive years — your remaining balance will be completely forgiven. It’s a great idea, but the program’s a mess and so inefficient and complicated too many people just give up. Think of a service member to defer their student loan payment while they’re deployed. The system is so restrictive that their active duty service didn’t count as public service and the loan forgiveness promise. It’s outrageous,” Biden said.
The Department of Education has recently proposed changes that will make this program better and over the long term much better, and now the Department has issued emergency temporary changes to retroactively credit public service so it counts and loans are forgiven. My message to all is: out with student debt! Go to pslf.gov before October 31st to see if you qualify for public service to student loan forgiveness.”
Biden added: “The Department of Education works with private education associations to accredit colleges and universities so they can receive federal aid. Last week, the Department of Education fired a college accreditor that allowed colleges like ITT and Corinthian to defraud borrowers.”
According to NPR, the Biden administration canceled $3.9 billion in federal student debt for 208,000 borrowers using borrower defense. One notable case was with ITT Technical Institute. Student who attended ITT Tech as far back as 2005 got that debt automatically canceled after authorities found “widespread and pervasive misrepresentations” at the college. ITT Tech, which at one pint had 130 campuses across 38 states, abruptly shut down in 2016 after heavy sanctions from the Education Department and accusations that “the company pushed students into risky loans and misled students about the quality of academic programs.” It had also made false claims about the ability of graduates to find jobs after graduating.
The administration also forgave loans for students at Corinthian Colleges, a chain of for-profit schools. The Department of Education forgave 560,000 borrowers who attended the colleges (which deceived students about their job placement rates and students’ ability to transfer credits). Under Biden, the Department forgave $5.8 billion — the single largest discharge of student loans in American history.