August 25, 2022
Details on the Biden Administration’s $10k Federal Student Loan Forgiveness
President Biden recently announced $10,000 blanket loan forgiveness for borrowers of federal student loans who make less than $125,000 per year and for married borrowers whose combined spousal income is less than $250,000 per year. In a new insight, Data and Policy Analyst Tom Lee reviews the president’s loan forgiveness plan and explains why it will fail to produce any meaningful reform to the student loan program.
- The prescribed individual and spousal income caps are at least in the 89th percentile of 2021 U.S. annual income distributions, meaning lower, middle, and even many higher-income borrowers will receive forgiveness in some amount.
- The amount of loan forgiveness increases to $20,000 for borrowers who have also received a Pell Grant as an undergraduate student.
- Blanket loan forgiveness in any amount unfairly shifts large educational costs to taxpayers and would only delay historical trends in outstanding federal student loan debt: By 2026, the total amount of federal student loan debt will likely bounce back to present levels.