President announces largest student loan forgiveness extension to date

WASHINGTON (Gray DC) - President Joe Biden announced Wednesday an extension on student loan forgiveness. The help will also be the largest borrowers have received to date. However, critics are torn over if the money is enough and if the program should exist at all.

The student loan debt forgiveness program started at the height of the pandemic and was set to expire on Aug. 31. Under the president’s new extension, people who make less than $125,000 are eligible for $20,000 in forgiveness if they went to college with Pell grants. If they did not go to college with Pell grants, borrowers at that income level can receive $10,000 in student loan forgiveness.

“Really excited about this announcement. This is huge, not only the loan forgiveness, but fixing a broken system which has been broken and really making people afraid of going to higher education or getting loans,” U.S. Secretary of Education Miguel Cardona told Washington News Bureau reporter Jamie Bittner.

The program also freezes payments through Dec. 31. The Department of Education will also propose a new program to allow people with undergraduate loans to cap repayment at 5% of their monthly income.

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Read more details of the student loan forgiveness extension here from the White House

Read more on the relief here from the U.S. Dept. of Education

The Secretary of Education urges anyone who wants information on how to receive student loan forgiveness to head to to this link

The U.S. Department of Education is calling the announcement a final extension. They are warning everyone to be prepared to start payments again in January 2023. They’ll be announcing more details on how to claim relief in the weeks ahead.

The president’s program is also receiving criticism. Senate Minority Leader Mitch McConnell (R-Ky.) called the help a “slap in the face.”

He said, in part, in a statement, “Washington Democrats have found yet another way to make inflation even worse, reward far-left activists, and achieve nothing for millions of working American families who can barely tread water. President Biden’s student loan socialism is a slap in the face to every family who sacrificed to save for college, every graduate who paid their debt, and every American who chose a certain career path or volunteered to serve in our Armed Forces in order to avoid taking on debt. This policy is astonishingly unfair. The median American with student loans already has a significantly higher income than the median American overall. Experts who studied similar past proposals found that the overwhelming benefit of student loan socialism flows to higher-earning Americans. Democrats specifically wrote this policy to make sure that people earning six figures would benefit.”

The White House believes the plan will not impact inflation because student loans are paused and the combination of restarting payments and the targeted debt relief will offset each other.

Cardona added, “we have a responsibility to help folks who have struggled during a pandemic, just like we do to small businesses. Right? We provided loans for small businesses to keep them up and keep them open. So we’re helping Americans now. We’re investing in Americans. And what we’re doing is we’re targeting those middle class Americans who are struggling and those who are really, you know, financially strapped and need support,” he said. “...We’re targeting those who are most impacted by the pandemic. I have the responsibility and so does Senator McConnell, to make sure people are not worse off after the pandemic than they were before. And we take that very seriously at the Department of Education. I know the president does, too.”

Meanwhile, others critics say the plan should go even further.

In an opinion piece written prior to the announcement for CNN, top NAACP leaders Derrick Johnson and Wisdom Cole wrote, “We are fed up. The NAACP has been calling for a minimum of $50,000 in student loan debt cancellation because our research indicates it is what is necessary to make a meaningful difference.”

The White House said, however, it is working to advance racial equality by targeting the relief. It acknowledged in a statement, “the student debt burden also falls disproportionately on Black borrowers. Twenty years after first enrolling in school, the typical Black borrower who started college in the 1995-96 school year still owed 95% of their original student debt.”

“One out of four black Americans will have their loans canceled after today’s announcement,” said Cardona. “And, we know black Americans are twice as likely to be Pell recipients, so they’re twice as likely to be eligible for $20,000 in loan forgiveness. We’re really proud of this work and what it does to address the inequities that were there long before the pandemic but were made worse by the pandemic.”

The White House said the forgiveness will help 20 million people and 90% of the help will go to those earning less than $75,000. It said no one in top 5% will earn relief.

As for making college more affordable long term, Cardona said “we introduced the college scorecard and we made it better. We’re working to hold colleges accountable and we’re being very clear that we’re not afraid to name and shame if we think that the return on investment is very poor. We’re working with our colleges to really increase inclusivity, college completion, and we’re monitoring that as well. We’re not afraid to go after accreditation of those who are handing out accreditation to people who are taking advantage of our students.”

He added, “the loan forgiveness is huge. It’s huge. But, we’re just as proud of the work that we’re doing to fix a broken system.”

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