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May 28, 2022 - Politics & Policy

Activists criticize reported White House plan to cancel $10,000 of student debt

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President Biden, with Sen. Tom Carper (L) and University of Delaware president Dennis Assanis, attends the graduation ceremony for his alma mater on May 28. Photo: Mandel Ngan/AFP

With President Biden reportedly leaning toward forgiving $10,000 of student loan debt for most borrowers, prominent advocacy organizations say the plan would not go far enough to provide relief for borrowers.

Driving the news: The White House is planning to cancel $10,000 per borrower, the Washington Post reported Friday, citing three unnamed sources familiar with the discussions. The proposal — below the $50,000 that some Democrats have called for — is not yet finalized, a White House spokesperson said.

  • The proposal would apply only to borrowers earning less than $150,000 in the previous year or married couples who file taxes jointly and earned less than a combined $300,000, per the Post.

What they’re saying: NAACP president Derrick Johnson criticized the proposal in a Twitter thread Friday, likening the plan to “pouring a bucket of ice water on a forest fire.”

  • Eliminating $10,000 per borrower, Johnson said, “won’t do anything” for Black borrowers who are saddled with almost twice as much debt after graduation as white ones.
  • Thomas Gokey, the co-founder of the Debt Collective, told CNBC that adding stipulations to forgiveness, rather than offering it to all borrowers, would cause some to miss out on the relief.
  • “Everyone will have to jump through hoops,” Gokey said.

By the numbers: Across the country, more than 40 million people owe a combined $1.7 trillion in student loan debt.

  • Canceling $10,000 in debt per borrower would cost an estimated $230 billion, according to the Committee for a Responsible Federal Budget.
  • A separate estimate, published by the New York Fed in April, pegs the cost higher, at $321 billion.
  • Economists that conducted the April analysis found that a third of borrowers would see their entire outstanding balance wiped away if the government forgave $10,000 in debt.

Yes, but: The average borrower owes more than $30,000, and over 3 million people have more than $100,000 in student debt.

Background: As a candidate, Biden pledged to cancel $10,000 per borrower, and made no mention of limiting debt forgiveness to borrowers who earn under a certain amount.

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