Student borrowers gather near the White House to tell President Biden to cancel student debt on May 12, 2020.
Paul Morigi | Getty Images Entertainment | Getty Images
President Joe Biden’s long-awaited plan to cancel student debt, announced Wednesday, drew immediate pushback from some lawmakers and consumer groups even as they praised the landmark measure.
The White House said it would forgive $10,000 in federal student debt for most borrowers and up to $20,000 for recipients of Pell Grants, which are available to undergraduate students based on financial need. The plan can eliminate the balances of at least 9 million borrowers, according to higher education expert Mark Kantrowitz.
Biden ‘should and could have done a lot more’
Astra Taylor, co-founder of the Debt Collective, a syndicate of debtors, called Wednesday’s announcement “bittersweet”.
“On the one hand, this is a historic victory for our movement,” she said in a statement. “Yet President Biden should and could have done much more than write off $10,000 or [$]20,000 – and he could have made the relief automatic, instead of imposing unnecessary obstacles.”
Nearly 8 million borrowers could be eligible for automatic relief; However, some borrowers may need to apply if the US Department of Education does not have relevant income data, according to the Federal Student Aid website. This application is not yet available.
“We intend to keep fighting until all student debt is canceled and college is free,” Taylor said. “If President Biden can cancel that much debt, he can cancel it all.”
Biden paired the debt forgiveness and payment pause with a move to cap undergraduate loan repayments at 5% of monthly income.
Warren and Schumer pledge to ‘pursue all available avenues’
Senate Majority Leader Chuck Schumer, DN.Y., and Sen. Elizabeth Warren, D-Mass., hailed Wednesday’s policy announcement as “the most effective action the president can take alone to help working families and the economy”. “
The duo had pushed for the White House to forgive up to $50,000 in federal student debt – and they hinted at an ongoing fight for more relief.
“Make no mistake about it, the work – our work – will continue as we pursue every avenue available to resolve the student debt crisis, help close the racial wealth gap for borrowers, and sustain the growth of our economy,” Schumer and Warren said.
Cancellation of $10,000 ‘achieves next to nothing’
Derrick Johnson, president and CEO of the NAACP, lamented that Biden did not cancel $50,000 or more in loans per borrower. He called student debt forgiveness a “racial and economic justice issue” that could help close the racial wealth gap, which often causes black students to borrow more than other students.
“Cancelling just $10,000 of debt is like pouring a bucket of ice water on a forest fire,” Johnson wrote in an op-ed. “It adds next to nothing – only making a dent in the problem.”
The data suggests that doubling the maximum rebate amount — to $20,000 — for Pell Grant recipients will benefit Black student borrowers the most. At this point, 72% of black students received a federal Pell grant in the 2015-2016 school year, about double the share of Asian and white students that year, according to the most recent data from the National Center for Education Statistics.
Carlos Moreno, senior campaign strategist at the American Civil Liberties Union, applauded the policy’s impact on black borrowers.
“Cancelling student debt will help provide financial stability and mobility for people of color — especially black Americans — who are disproportionately burdened with student debt while providing immediate financial relief and peace of mind to millions of Americans,” Moreno said.
Forgiveness could ‘aggravate inflation’
While some expressed concern that the Biden administration had not gone far enough, others said the White House measures went too far and threatened to exacerbate stubbornly high inflation.
“Democrats in Washington have found another way to make inflation even worse…and do nothing for millions of working American families who can barely walk on water,” the Minority Leader told the Senate, Mitch McConnell, R-Ky.
But Adam Green, co-founder of the Progressive Change Campaign Committee, described the measure as “a bigger investment [in dollar terms] than the GI Bill – among young people and millions of others.”
“Today, the cancellation of up to $20,000 in student debt for as many as 43 million Americans will have a historic impact on Americans who have faced a unique generational burden,” Green said.