In a speech at the White House on Wednesday afternoon, August 24, President Joe Biden announced his federal student loan relief plan, for some eligible borrowers. He said the help will be provided to “families who need it the most.”
Students with Pell Grant loans, who earn less than $125,000 a year, will be eligible for up to $20,000 in loan forgiveness.
Individuals who make less than $125,000, but do not have Pell Grants, will be eligible for $10,000 loan cancellation.
Students who incurred undergraduate federal loans will be able to limit their monthly payments to 5% of their monthly earnings. Biden also said that after 20 years payment of a loan, “Your obligation will be fulfilled if it hadn’t already been fulfilled – meaning you won’t have to pay anymore, period.”
The pause on loan payments that occurred during the pandemic years, will be extended again until December 31, 2022.
In answer to the big question, ‘who is going to pay for that?’ Biden said that the student loan relief plan will be paid for by reducing the federal budget deficit.
“I hear it all the time: ‘how do we pay for it?’ We pay for it by what we’ve done; last year, we cut the deficit by more than $350 billion. This year, we’re on track to cut it by more than $1.7 trillion by the end of this fiscal year, the single largest deficit reduction in a single year in the history of America. And the Inflation Reduction Act is going to cut it by another $300 billion over the next decade,” Biden said at the White House.
“I will never apologize for helping … working Americans and middle class, especially not to the same folks who voted for a $2 trillion tax cut that mainly benefitted the wealthiest Americans and the biggest corporations, that slowed the economy, didn’t do a lot for economic growth, and wasn’t paid for and racked up this enormous deficit,” he said.
He expressed his opinion about public opposition to helping working people who have student loans. “The outrage over helping working people with student loans, I think, is simply wrong. Dead wrong,” he added.
The president said that the relief plan will help grow the economy by assisting the middle and lower classes, which ultimately can be a win-win for everyone.
He emphasized that the announcement today was about giving people opportunities and possibilities for their advancement as Americans.
The detailed debt forgiveness announced by the White House was a compromise from what Democrats were looking for, but in the climate of midterm elections, and opposition to the cancellation of debt by Republicans, as well as people who complain that they themselves had to work hard to repay their debt, it was the best the administration felt they could do at this time.
