President Joe Biden will announce Monday that the student loans held by 10 million Americans will be transferred to taxpayers, a White House official told reporters on Monday.
The plan to put the burden of student loan debt on taxpayers is widely seen as a political move to gain electoral support among younger voters who have little appreciation for Mr. Biden’s leadership.
Under the plan Mr. Biden is touting in Wisconsin, taxpayers could expect to absorb about $5,000 for each of its 10 million students. Overall, Biden intends to reduce student loan repayments for 23 million students, leaving taxpayers to shoulder the burden of total loans for more than 4 million Americans.
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“Today’s announcement shows that we continue to deliver on our promise,” Education Secretary Miguel Cardona told reporters Sunday. “We will provide as much relief as possible to as many borrowers as possible, as quickly as possible.”
The plan’s purpose is to boost support for Biden ahead of the November election. new york times Admitted:
Biden was furious that the president’s original plan, which was supposed to eliminate up to $20,000 in debt, would have eliminated tens of millions of dollars in debt if he succeeded in putting the new plan into action before the November election. It could help garner support among disillusioned voters. of the borrower.
But the president faces significant legal and timeline obstacles. The new plan will require a public comment period of several months before it takes effect. Officials said Sunday that only some of the provisions would begin taking effect in “early fall” of this year.
Officials also expect legal challenges from Republicans, which could take months to resolve. The plan could remain stalled as voters go to the polls to choose between Mr. Biden and former President Donald J. Trump in November.
Biden’s previous attempt to shift student loans to taxpayers failed at the Supreme Court. Since then, Biden has used his executive power to transfer $138 billion in student loan debt from 4 million borrowers to taxpayers.
According to the White House, the plan announced by Biden, if finalized as proposed, would provide some relief to the following people:
- A borrower who owes more money than he or she started paying back. Millions of borrowers across the country owe more money than they did when they started making payments due to unpaid and capitalized interest. black And Latino borrowers are more likely to experience increased student loan balances due to excessive interest accumulation.Four years after graduation, black bachelor’s degree holder on average I owe them more than they owe me.
- Borrowers who are eligible for loan forgiveness but have not yet applied. Borrowers face the administrative burden of completing loan forgiveness applications. Many borrowers receive automatic debt relief through loan forgiveness programs for which they are eligible but unsuccessfully applied, such as the Savings for a Valuable Education (SAVE) Plan, the Public Service Loan Forgiveness Program, or other forgiveness programs.
- Borrowers who first started making payments many years ago. Many borrowers pay off their loans decades after they graduate from school. The administration’s new plan would cancel the debt of all borrowers with only undergraduate student debt that they started repaying more than 20 years ago and graduate student debt that they first started repaying more than 25 years ago. This is the cancellation of a borrower’s loan.
- Borrowers enrolled in programs with low monetary value. For those who participated in an institution or program that failed to provide accountability or provide sufficient value for money to students, the institution was closed before such decisions were finalized. This includes those who are eligible for relief. Black and Latinx borrowers make up a disproportionately large share of students enrolled in these programs.
- Borrowers who are having difficulty repaying their loans. Millions of borrowers could be eligible for relief if they are experiencing difficulties in their daily lives that prevent them from repaying their loans in full now or in the future. Black and Latino borrowers High default rate It harms their ability to build generational wealth, start businesses, and buy homes more than white borrowers.
