Statement On President Biden’s Student Loan Debt Forgiveness Announcement
(WEDNESDAY, Aug. 24, 2022) -- Senator Patrick Leahy (D-Vt.) released the following comments on the President’s announcement Wednesday on student loan debt forgiveness:
“I commend the President for proposing a way to help people with student debt. At home in Vermont, UVM for instance has recognized these challenges and refrained from tuition increases for the last four years while our state colleges strive to provide affordable access to higher education for Vermont’s students. The cost of higher education has become unsustainable for most Americans. Many find themselves saddled with high amounts of student loan debt. Too often I hear from Vermonters who have taken out a second mortgage on their house or who are working at a second or third job to pay off their student loans. I know that many have been working for years – and even decades – only to make a dent in the principal amount owed due to high interest rates. It is heartbreaking to hear the stories of those who have put off important life decisions, such as having a child, because of their student loan debt. This is a pervasive and unacceptable experience that Americans face in this country.”
According to the White House, their three step plan for decreasing student debt for Americans is:
- Provide targeted debt relief to address the financial harms of the pandemic, fulfilling the President’s campaign commitment. The Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 ($250,000 for married couples). No high-income individual or high-income household – in the top 5% of incomes – will benefit from this action. To ensure a smooth transition to repayment and prevent unnecessary defaults, the pause on federal student loan repayment will be extended one final time through December 31, 2022. Borrowers should expect to resume payment in January 2023.
- Make the student loan system more manageable for current and future borrowers by:
- Cutting monthly payments in half for undergraduate loans. The Department of Education is proposing a new income-driven repayment plan that protects more low-income borrowers from making any payments and caps monthly payments for undergraduate loans at 5% of a borrower’s discretionary income—half of the rate that borrowers must pay now under most existing plans. This means that the average annual student loan payment will be lowered by more than $1,000 for both current and future borrowers.
- Fixing the broken Public Service Loan Forgiveness (PSLF) program by proposing a rule that borrowers who have worked at a nonprofit, in the military, or in federal, state, tribal, or local government, receive appropriate credit toward loan forgiveness. These improvements will build on temporary changes the Department of Education has already made to PSLF, under which more than 175,000 public servants have already had more than $10 billion in loan forgiveness approved.
- Protect future students and taxpayers by reducing the cost of college and holding schools accountable when they hike up prices. The President championed the largest increase to Pell Grants in over a decade and one of the largest one-time influxes to colleges and universities. To further reduce the cost of college, the President will continue to fight to double the maximum Pell Grant and make community college free. Meanwhile, colleges have an obligation to keep prices reasonable and ensure borrowers get value for their investments, not debt they cannot afford. This Administration has already taken key steps to strengthen accountability, including in areas where the previous Administration weakened rules. The Department of Education is announcing new efforts to ensure student borrowers get value for their college costs.
“As a strong supporter of the Public Service Loan Forgiveness program, I am pleased to hear that the administration has revamped the PSLF program, which has already identified more than 100,000 borrowers eligible for $6.4 billion in loan relief. Additionally, DOE is providing $7.8 billion in relief for more than 400,000 borrowers who have permanent disabilities and approving $2 billion in borrower defense claims to approximately 107,000 borrowers. These changes also include approving $1.26 billion in closed school discharges for students of several colleges and universities that are now defunct. Along with many, many Vermonters, I am encouraged by these changes and I believe that we must act to help address student debt in this country, and in a significant way.”
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