FOR IMMEDIATE RELEASE
August 24, 2022
Contact: Juan Ramiro Sarmiento
(785) 760-6567 | JuanRamiro.Sarmiento@younginvincibles.org

Biden Announces Broad Student Debt Cancellation Plan

The Administration Will Cancel $10,000 Per Borrower, $20,000 For Pell Recipients, and Extends Repayment Pause to Dec. 31st

(Washington, DC) – Moments ago, President Joe Biden announced his proposal enacting broad student loan debt cancellation, forgiving $10,000 per borrower and $20,000 for borrowers that received Pell grants earning less than $125,000 per year. The much-anticipated decision also comes with one final extension of the payment pause until December 31st. Furthermore, the Department of Education is proposing a new income-driven repayment plan to cap monthly payments for undergraduate loans at 5 percent of discretionary income

The move represents the culmination of a sustained pressure campaign by advocacy organizations, public officials, and youth activists to urge President Biden to keep his promise by using the full extent of his authority to unilaterally enact broad student debt cancellation.

The action aims to address the $1.9 trillion national student debt crisis, impacting over 44 million borrowers. Among all borrowers with student debt, nearly 40 percent were unable to complete their degrees but remain saddled with thousands in debt. Black women and people of color disproportionately shoulder the burden of student loan debt, further widening the racial wealth gap. The crushing weight of student debt has kept millions from starting a small business, buying a home, or even finishing college. Today, more than nine million borrowers are currently in default. Student loans have much higher rates of delinquency than any other type of household debt.

Cancellation of $10,000 for most borrowers and $20,000 for Pell recipients has the potential to eliminate the debt balance of 20 million borrowers, or nearly half. Including a higher level of forgiveness for Pell recipients also means a more targeted relief for borrowers of color, who are more likely to receive Pell grants and have higher loan balances. But means-testing student loan debt cancellation undermines the Biden Administration’s goals of providing relief to borrowers and decreasing internal burden. Including means-testing will complicate the process of receiving relief and could leave out borrowers who need it most.

In response, Kristin McGuire, Executive Director for Young Invincibles issued the following statement:

“The Biden Administration’s decision will make real strides toward securing the economic opportunity of higher education for young people who have been crushed by the weight of the student debt crisis. While we have consistently asked for larger amounts of cancellation, we also recognize that this action will make a tangible difference in the lives of millions. By some estimates, this will wipe out the full loan balance of 20 million borrowers – that is a major impact.

While this announcement is huge, the inclusion of means-testing measures to cap cancellation for higher incomes may also have the effect of limiting its effectiveness. We call on the Department of Education to lower the administrative burdens on borrowers to make sure this reaches everyone who is eligible. Young Invincibles is also committed to helping borrowers seize this opportunity for relief.

This move to cancel student debt is a major win for borrowers and will provide immediate relief for millions, but we know it is only a temporary measure. We must now fix our broken higher education system to prevent such a crisis from developing again. It’s time to make debt-free college accessible for all who need it. It’s time to lower interest rates to stop turning a profit on the backs of students. And it’s long past time that states and the federal government invest in higher education as the invaluable resource it is.

We want to be clear, we know that today’s decision would not be possible without the unrelenting labor of a broad coalition of advocates, activists, and elected officials. We want to thank the thousands of young people in our network and nationwide who emailed, called, tweeted, attended events, and shared their personal stories to decision-makers about why this was necessary.

Today is not the end of the story for our national student debt crisis. Young Invincibles is as committed as ever to the long fight to make the promise of higher education a reality for all who seek it.”

Young Invincibles (YI) is a national advocacy and policy nonprofit organization focused on amplifying the voice of young people in the political process at the local, state, and federal levels. YI focuses on issues impacting young adults ages 18 to 34 in higher education, health care, economic security, and civic engagement. Our offices include Washington, D.C., California, Colorado, Illinois, New York, and Texas. For more information, please contact Juan Ramiro Sarmiento at (785) 760-6567 or juan.sarmiento@younginvincibles.org