How student loan forgiveness affects Washington
Hundreds of thousands of Washingtonians stand to benefit from President Biden's announcement that the federal government will forgive up to $20,000 in student loan debt per borrower.
Driving the news: On Wednesday, Biden said his administration will cancel $10,000 in federal student loan debt for people who make under $125,000 a year. That debt reduction also will be available to households earning less than $250,000.
- People who received Pell Grants can have $20,000 shaved off their debt if they meet those income requirements.
- The president also extended the pause on repayments for another four months, so people won't have to make loan payments until Jan. 1, 2023.
- Previously, payments were set to resume Sept. 1 of this year.
By the numbers: According to the U.S. Department of Education, as of March 31, nearly 783,000 Washington residents carried a total of $28.2 billion in student loan debt.
- About 415,000 Washingtonians had up to $20,000 in debt, while about 249,000 had balances of $10,000 or less.
- Many of those borrowers would be eligible for forgiveness under Biden's plan, according to the office of U.S. Sen. Patty Murray (D-Washington).
What they're saying: In a statement, Murray called the loan forgiveness "a milestone moment."
- "In Washington state alone, the President's action will be life changing for hundreds of thousands of eligible borrowers whose debt will shrink — and so many whose balances will be completely canceled," the senator’s statement said.
The other side: In a news release Wednesday,, Caleb Heimlich, chair of the Washington State Republican Party, criticized the cost of Biden's plan.
- Heimlich cited an analysis from the Penn Wharton Budget Model, which found forgiving $10,000 in loans for those making under $125,000 would cost the government about $300 million.
- "This is unfair to workers who either didn't borrow or were responsible and paid off their debt and are now forced to pay more taxes in the future," Heimlich said in the news release.
What's next: About 8 million Americans could have their debt cut automatically, because the Department of Education already has their income data. But the majority of borrowers will have to apply and provide that information.
- The administration plans to make the application for debt forgiveness available in the coming weeks.
- To get notified when it goes live, sign up here.
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