OP-ED: Easing the Burden of Student Loan Debt
By Congressman James E. Clyburn (D-SC), House Majority Whip
Higher education should be a stairway to economic mobility, but student debt has become an obstacle for far too many people. More than $1.6 trillion in outstanding federal student loans crush 43.4 million borrowers in the United States today. Millions of people cannot afford to buy a home, start a business or save for retirement.
That’s why President Biden, at the request of yours truly and many others, campaigned to tackle student debt. He promised to deliver targeted student debt relief to working-class and middle-class families, and he delivered.
The student loan debt repayment pause – precipitated by Covid-19 – ends on December 31. Therefore, in January 2023, borrowers are required to restart their student loan repayments. Understanding that the repayment pause temporarily brought much-needed relief to overburdened borrowers, the Biden-Harris administration announced new targeted debt relief plans to make the student loan system more manageable for working families. .
Last month, President Biden announced up to $20,000 in federal student debt forgiveness to Pell Grant recipients and up to $10,000 in federal student debt forgiveness to non-beneficiaries of the Pell Grant. Pell scholarship. Borrowers earning less than $125,000 per year or households earning less than $250,000 are eligible for debt relief.
The Administration is also making the student loan system more manageable for current and future borrowers by improving the income-tested repayment plan that will significantly reduce future monthly payments for low- and middle-income borrowers. They are changing the rules to reduce income-driven reimbursement plans from 10% of discretionary income to 5%. The rule change will also increase the amount of income considered non-discretionary, protecting it from reimbursement. This ensures that no borrower earning the annual equivalent of a minimum salary of $15 will have to make a monthly payment.
This aid will change the lives of millions of workers. Many of the 43 million Americans who carry federal student debt will receive some debt forgiveness. About 27 million borrowers will see $20,000 forgiven on their student loan balance. For 20 million borrowers, this is enough to completely wipe out their student loan balance. These latest actions build on steps the Biden-Harris administration has already taken to provide more than $32 billion in loan relief to 1.6 million borrowers.
In 2021, the US Department of Education announced it was repaying $6 billion in loans to settle a class action lawsuit filed against the agency over its handling of the borrower defense repayment program under the Trump administration. This program provides debt relief to borrowers defrauded by for-profit institutions like the defunct Trump University. The Biden administration’s new rules make it easier to get debt relief for people harmed by predatory marketing and recruiting practices. As a result, the agency received 60,000 applications in just a week after the announcement, compared to just 100,000 applications in 2021.
Finally, President Biden made some temporary changes to applicants for the Civil Service Loan Forgiveness Program because in 2017, the first year borrowers could apply for forgiveness, only 1% were approved. On October 6, 2021, Biden’s Department of Education announced program changes and a time-limited waiver so that more students can be eligible and more realistic repayment plans can be implemented. This includes loan types and payment plans that were not previously eligible.
As a result, more than 175,000 borrowers received more than $10 billion in forgiveness due to their public sector work in professions such as teachers, nurses, social workers, military and first responders. The deadline to apply under the time-limited waiver is October 31, 2022, so if you think you qualify, I encourage you to visit https://studentaid.gov/ and search for the Civil Service Loan Forgiveness Program.
These actions by President Biden will help close the racial wealth gap. More than 50% of black borrowers say their net worth is less than they owe in student loan debt. Additionally, black students are more likely to borrow, and to borrow larger amounts, compared to other racial or ethnic subgroups. Black college graduates owe an average of $25,000 more in student loans than white college graduates. Four years after graduation, 48% of black borrowers owe an average of 12.5% more than they borrowed.
By relieving this disproportionate and crushing debt, we are giving the next generation the opportunity to pursue the American Dream and provide themselves and their families with a life they have earned through hard work and the pursuit of higher education.
We’ve all heard the saying that a rising tide lifts all boats. I believe these efforts by the Biden administration are not only helping to lift the boats, but they are also putting the wind in their sails to help us get closer to the promise of a “more perfect Union.”