Student loan forgiveness: Here’s who could benefit if Biden forgives $10,000 debt


Biden has indicated that if he takes steps to provide more student loan debt sorry, he can limit the relief to $10,000 per person and exclude the wealthiest borrowers.

His administration has already canceled more than $17 billion of the $1.6 trillion in unpaid federal student debt by expanding existing forgiveness programs for public sector workers and borrowers who have been defrauded by for-profit colleges. . Additionally, it has extended the pandemic-related pause on student loan payments four times, most recently moving the expiration date from May 1 to August 31.

But those actions fall short of a campaign promise Biden made to write off student debt more broadly. He is also under pressure to do more from other Democrats who are urging him to write off $50,000 per borrower.

Here’s what we know so far about who could benefit if the president takes action to forgive more student loan debt:

Relief for those earning less than $125,000

Excluding borrowers who earn more than a certain amount is one way Biden is cutting student debt relief.

Earlier this month, White House press secretary Jen Psaki said the president was using his campaign comments about giving student loan forgiveness to people earning less than $125,000 a year. an as a framework for his current considerations.

His campaign proposal called for the immediate cancellation of a minimum of $10,000 in student debt per person in response to the pandemic, as well as the cancellation of all federal debt related to undergraduate college tuition. two- and four-year public college and university cycle for borrowers earning up to $125,000 per year.

How many households could benefit from it?

According to Matthew Chingos, vice president of education data and policy at the Urban Institute, about 19% of households with total incomes below $125,000 have student loan debt. He based the estimate on the 2019 Consumer Finance Survey conducted by the Federal Reserve.

That means about 81% of households below the income threshold have no student loan debt and would see no benefit if Biden took further action.

Most households would still not benefit even if the president did not put an income threshold in place. Only about 18% of households with incomes over $125,000 have student debt.

How many debts could be cancelled?

Biden has always resisted political pressure to cancel $50,000 per borrower. In late April, he reiterated that if he offered additional loan forgiveness, it wouldn’t be as much as a $50,000 reduction.

The White House has long maintained that the president would support the cancellation of $10,000 per borrower.

Chingos Ratings that canceling $10,000 for households earning less than $125,000 a year would cancel a total of $277 billion in student loan debt.

(It assumes that the relief is phased out for married and single borrowers earning between $75,000 and $125,000 per year. This means that borrowers earning less than $75,000 per year would receive $10,000 in forgiveness and the benefit decreases as income increases, leaving those earning more than $125,000 a year without any debt relief.)

Who would see the greatest benefit?

Chingos also breaks down the share of debt canceled by income group under these assumptions.

A third of the canceled dollars would go to households with total incomes between $45,000 and $70,000 a year.

About a quarter would go to those earning between $26,000 and $44,000, and another quarter to those earning between $71,000 and $122,000.

About 16% of the relief would go to the poorest households earning less than $25,000 a year.

Pardon by Race

Proponents of student debt forgiveness argue that it would help close the racial wealth gap because Black students are more likely to take on debtborrow larger amounts and take longer to repay than their white peers.
But economist Adam Looney, a nonresident senior fellow at Brookings Institution, argues that there is better ways to close the racial wealth gap because relatively fewer black students are going to college.
The Chingos Model found that 62% of canceled student loan dollars would go to white borrowers while 25% would go to black borrowers if Biden canceled up to $10,000 for those earning less than $125,000 a year.


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