On August 24, the Biden administration announced it would forgive $10,000 of federal student loan debt per borrower and $20,000 for borrowers who also received Pell Grants. The administration will also extend the existing student loan moratorium for an additional four months, through Dec. 31, 2022. The decision applies only to undergraduate student loans and is limited to debtors with annual incomes below $125,000. $ per year (or less than $250,000 for households).
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According to the most recent data from the US Department of Education, at least 14 million of the roughly 43 million Americans with federal student loans have less than $10,000 in debt and could see their entire debt forgiven. Looking specifically at debtors under 35, about 36% of them have less than $10,000 in federal student loans and could see their student loan bills wiped out. We do not currently have data on how many of these millions of debtors would be rendered ineligible for debt relief due to the income ceiling.
This announcement falls short of the $50,000 minimum per borrower supported by several prominent lawmakers and the NAACP, and even further from the full debt forgiveness supported by hundreds of labor and community groups, and numerous activists and defenders. This $50,000 benchmark, for example, could cancel the debt of at least 33 million debtors and at least 83% of all debtors under 35 years of age. And for the others nearly 30 million borrowers with After more than $10,000 in student loans, it’s unclear how quickly the interest rates that are already burying borrowers could bring their total debts back to the highs they had hit before.
In an April survey, more than half of student borrowers said they would not be able to pay the monthly installments if the moratorium ended. This extension will be the Biden administration’s fifth since taking office, with previous deadlines moving from September 30, 2021 to January 31, 2022, May 1, 2022, and most recently August 31, 2022. It will also be the eighth. full extension since the original federal CARES Act student loan moratorium took effect at the start of the pandemic. Total federal student debt still hovers at $1.6 trillion for about 43 million borrowers, according to the most recent data available from the US Department of Education. (Counting private loans, the total student debt burden reached $1.75 trillion.)
Of the 43 million people with federal student debt, 35.4 million of them have loans currently in deferment, forbearance or default. A further 7.2 million are currently in school with student debt or within the six-month grace period after leaving full-time student status, meaning they are not yet required to pay their bill. In total, more than 40 million people who are currently defaulting on their student loans are waiting — stretch after stretch after stretch — for an update from Biden.
Meanwhile, the debt activists behind the Debt Collective have used their own tactics to score two big victories. First, they secured $1.7 million in debt forgiveness for hundreds of alumni of Bennett College, a historically black all-female university in North Carolina. Soon after, the collective helped win $5.8 billion in canceled student debt for 560,000 former students at the infamous for-profit Corinthian Colleges.
This post was originally posted on Teen vogue.
