Activists criticize reported White House plan to cancel $10,000 of student debt
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.
- Last month, the president ruled out forgiving $50,000 per borrower, breaking with calls from Senate Majority Leader Chuck Schumer (D-N.Y.) and other prominent Democrats.
- A moratorium on federal student loan payments has been in place through the pandemic. Biden has extended the freeze several times, but it is currently set to expire at the end of August.