BIDEN ADMINISTRATION FORGIVES PARTIAL STUDENT LOANS OF THOSE EARNING UNDER $125,000
White House fires back at critics who had federal loans forgiven too
By Miriam Raftery
August 27. 2022 (Washington D.C.) – If you have a federal student loan and earn less than $125,000 a year, you are eligible to have $10,000 forgiven – or $20,000 if you were a recipient of a Pell Grant awarded to help low-income students attend college.
President Joe Biden announced the plan this week, also extended a pause on student loan repayments until December 31. In addition, Biden’s plan caps future repayments at 5% of your monthly income, down from the current 10% threshold.
An application for the partial student loan forgiveness will be posted later this year; borrowers can sign up at https://www.ed.gov/subscriptions to receive updates on the federal student loans.
Why are so many students having trouble repaying their loans? Higher tuition costs coupled with a 32% decrease in federal student aid since the early ‘90s and COVID job losses all played a role, but perhaps the biggest problem has been changes in recent years in how interest rates and repayments are structured. With recent loans, some students paying the minimum required payment on time each month find that interest continues accruing until they soon owe more than the original loan amount and have no way to pay it off as the debt keeps climbing.
Lemon Grove resident Brian Rickel found himself in this situation. He writes on Facebook that “the vast majority of us have always paid our school loans on time. Every month. Not only have we not even made a dent in them, many like me owe a lot more than we originally borrowed…We are simply looking for fairness in lending that doesn’t saddle a person with debt the rest of their lives just for getting an education.” He calls the system “broken” and says a long-term fix is needed.
In a press briefing, President Biden noted that the cost to attend a four-year university has nearly tripled in the past 40 years, but many states have cut their support of state colleges and universities, leaving students to pick up more of the tab. Pell Grants to help lower income families send kids to college used to cover 80% of the cost of a public four-year college, but now cover only about 32%.
Biden cited a college education as necessary for the U.S. to be competitive with other nations, many of which offer free higher education. "In the 21st century — in my view and I think the vast majority of Americans’ — 12 years of universal education is not enough, and we’re going to be outcompeted by the rest of the world if we don’t take action," he said.
Some Republicans have sharply criticized Biden’s partial student loan forgiveness. Senate Minority Leader Mitch McConnell called it “student loan socialism” that is “astonishingly unfair.” He accused Biden of giving away “government money to elites with higher salaries,” though Biden’s plan does not forgive loans for anyone owning more than $125,000. According to the U.S. Department of Education, 87% of the loans forgiven will be to people earning less than $75,000 a year, with the remaining 13% to those earning $75,000 to $125,000.
The White House fired back at some Republican members of Congress who hypocritically criticized student loan forgiveness after their own companies received far larger Paycheck Protection Program (PPP) loan forgiveness during the pandemic.
Republican Rep. Marjorie Taylor Greene stated on Newsmax that the student loan forgiveness is “completely unfair” and complained that taxpayers “shouldn’t have to pay off the great big student loan debt for some college students that piled up massive debt going to some Ivy League school.” (Many of the loans were made to students attending public colleges and universities.)
The White House revealed Greene’s hypocrisy, since she had $183,504 in federal PPP loans forgiven.
Other GOP representatives who criticized the student loan forgiveness also pocketed huge sums through PPP loan forgiveness. The White House tweeted the amounts – and just how many student loans could have been covered with each:
Marjorie Taylor Greene: $185,000 forgiven. (19 students)
Matt Gaetz: $480,000 forgiven. (48 students)
Verne Buchannan: $2.3 million forgiven. (230 students!)
Markwaye Mullin: $1.4 million forgiven. (140 students!)
Kevin Hern: $1 million (100 students!)
Mike Kelly: $1 million (100 students!)
While Republicans largely opposed any student loan forgiveness, others argue that Biden’s actions did not go far enough.
California Labor Democrats posted on Facebook, “The issue of student loan debt is the inflated and compounding interested added to the original federal loan…Anyone who takes out any sort of government loan should pay back the principle. But anyone who takes out any form of government loan should not be shackled for the rest of their lives into a modern form of sharecropping, or indentured servitude due to mob-like compounding interest that never reduces the loan amount.”
The White House has not released figures on the exact amount of student loans eligible for forgiveness. According to the New York Times, 45 million Americans owe $1.6 trillion for federal loans taken out for college. The amount forgiven would be far less, since the Biden plans forgives only 10% of the money owed, or 20% for Pell Grant recipients—and nobody earning over $125,000 a year would have any loans forgiven.
President Biden defended his actions on Twitter in response to Republican critics, stating, “I will never apologize for helping America’s middle class, especially not to the same folks who voted for a $2 trillion tax cut for the wealthy and giant corporations that racked up the deficit,” a reference to actions taken when Republicans had control of Congress and the presidency.