The Biden administration will cancel up to $10,000 in student loan debt per borrower, according to sources with knowledge of the White House’s as-yet unannounced plans.
Experts agree that any amount of student debt forgiveness is beneficial to some extent, but $10,000 will not be enough to address the severity of the crisis.
According to sources who spoke with The Washington PostThe forgiveness plan would eliminate debt amounts up to $10,000 for any borrower who meets certain criteria. For example, borrowers with incomes greater than $150,000 (or $300,000. for married couples filing jointly) would not be eligible to receive student loan forgiveness.
President Joe Biden had intended to announce his plan to forgive student debt earlier in the week, but he was delayed by the Uvalde school shooting in Texas.
The details of the plan are not yet known and it is unclear if the White House will extend the student loan payment suspension after the current extension expires in August. The White House cautioned that decisions regarding debt forgiveness are still not finalized.
Several people commented on the modest spending suggestion for social media following the publication of the report.
“This is woefully inadequate,” wrote Philadelphia Inquirer Columnist Will Bunch adding:
This fall, millions — disproportionately Black and Brown, convinced the American Dream was hopeless unless they borrowed tens of thousands of dollars — will likely have to resume payments, and be worse off.
The plan is a “plug-a-small-leak fix for a collapsing dam,” Bunch said.
Progressive advocate Nina Turner, a former Ohio state senator, described the plan as falling “woefully short.”
“If [Biden] can cancel $10k, he can cancel it all,” Turner said.
The Debt Collective, the nation’s first debtors’ union, slammed the proposal as being almost as bad as doing nothing at all.
“Biden’s latest plan is to cancel $10,000 for *some* borrowers. But the interest builds so quickly that $10k will be back in just a few months for many,” the organization said.
A more comprehensive forgiveness plan would have better outcomes for a larger number of borrowers, especially people of color, who tend to carry student debt at a higher rate.
A report by Sen. Elizabeth Warren (D.Massachusetts), published earlier this month, found that a $10,000 per borrower forgiveness program was recommended. would only cancel out the balances of around 32 percent of people with student debt. (That report did not account for income limits, which would likely mean that Biden’s plan will impact an even smaller number of borrowers.)
However, a plan to forgive student loans up to $50,000 could reach three-quarters, which would have a positive effect on the economy and address wealth inequality as well as advance racial justice.
“The more President Biden cancels, the more we narrow the racial wealth gap among borrowers and the bigger the boost to Americans’ economic futures,” Warren said at the time of the report’s publication.