MADISON, Wisc. (AP) — President Joe Biden said Monday that college graduates would see “life-changing” relief from his new plan to ease debt burdens for more than 30 million borrowers, the latest attempt by the Democratic president to make good on a campaign promise that could buoy his standing with young voters.
(Click below to watch the President's statement)
Biden detailed the initiative, which has been in the works for months, during a trip to Wisconsin, one of a handful of battleground states that could decide the outcome of Biden's likely rematch with Donald Trump, the presumptive Republican nominee.
Biden said he wanted to “give everybody a fair shot” and the “freedom to chase their dreams” as he lamented the rising cost of higher education.
“Even when they work hard and pay their student loans, their debt increases and not diminishes," he said. "Too many people feel the strain and stress, wondering if they can get married, have their first child, start a family, because even if they get by, they still have this crushing, crushing debt.”
Biden's trip comes less than a week after primary voting in Wisconsin that highlighted political weaknesses for Biden as he prepares for the general election.
More than 48,000 Democratic voters chose “uninstructed” instead of Biden, more than double his narrow margin of victory in the state in 2020.
Trump also saw a significant number of defections during the state's primary, with nearly 119,000 Republicans voting for a different candidate than their party's presumptive nominee.
But Biden's results, which echoed similar protest votes in states like Michigan and Minnesota, have rattled Democrats who are eager to solidify the coalition that catapulted him into the White House in the first place.
A critical fracture has been the war in the Middle East. Young voters are more likely to disapprove of Biden's enduring support for Israel's military operation in Gaza, which has caused heavy casualties among Palestinian civilians.
Some have also been impatient with Biden's attempts to wipe away student loan debt. The U.S. Supreme Court last year foiled his first attempt to forgive hundreds of billions of dollars in loans, a decision that Biden called a “mistake.”
Since then, the White House has pursued debt relief through other targeted initiatives, including those for public service workers and low-income borrowers. Administration officials said they have canceled $144 billion in student loans for almost 4 million Americans.
At the same time, the Department of Education has been working on a more expansive plan to replace Biden's original effort. Although the new federal rule has not yet been issued, Monday's announcement was an opportunity to energize young voters whose support Biden will need to defeat Trump in November.
Republicans said Biden's plan shifts the financial burden of college tuition onto taxpayers who didn't take out loans to attend school.
“This is an unfair ploy to buy votes before an election and does absolutely nothing to address the high cost of education that puts young people right back into debt," said Sen. Bill Cassidy of Louisiana, who chairs a committee on education and other issues.
Biden will make the announcement on Monday in Madison, the state’s liberal capital and home of the University of Wisconsin’s flagship campus. The president is scheduled to speak at a nearby technical college.
Nearly 15% of Democrats in Dane County, home to Madison, voted “uninstructed.” That is nearly double the statewide total of 8%.
Democratic U.S. Rep. Mark Pocan, who represents Madison, said he was struck that concerns about Israel's war against Hamas in Gaza were top of mind among voters at five town halls over the past two weeks in more rural parts of his district.
“I was surprised to see the intensity on the issue of Gaza coming not from a student voice out of Madison, but older voters in more rural parts of the district,” Pocan said.
Pocan said the number of “uninstructed” votes shows the concern in Wisconsin and that Biden needs to address it. He said he planned to talk directly with Biden about it on Monday.
“I just want to make sure he knows that if we’re going to have a problem, that could be the problem in Wisconsin,” Pocan said.
Biden's new debt plan would expand federal student loan relief to new categories of borrowers through the Higher Education Act, which administration officials believe puts it on a stronger legal footing than the sweeping proposal that was killed by a 6-3 court majority last year.
The plan is expected to be smaller and more targeted than Biden's original plan, which would have canceled up to $20,000 in loans for more than 40 million borrowers. The new plan would cancel some or all federal student loans for more than 30 million Americans, the White House said. The Education Department plans to issue a formal proposal in the coming months, with plans to start implementing parts of the plan as early as this fall.
“President Biden will use every tool available to cancel student loan debt for as many borrowers as possible, no matter how many times Republican elected officials try to stand in his way,” White House press secretary Karine Jean-Pierre said in a call with reporters.
Details the White House released on Monday largely mirror a plan drafted by the Education Department. It lays out five categories of borrowers who would be eligible to get at least some of their federal student loans canceled if the rule is approved.
The plan’s widest-reaching benefit would cancel up to $20,000 in interest for borrowers who have seen their balance grow beyond its original amount because of unpaid interest. Borrowers could get the entirety of their interest erased, with no limit, if they are enrolled in an income-driven repayment plan and have annual incomes of less than $120,000 or couples making less than $240,000.
That part of the plan would forgive at least some unpaid interest for an estimated 25 million borrowers, with 23 million getting all their interest erased, according to the White House.
An additional 2 million borrowers would automatically have their loans canceled because they’re eligible but have not applied for other forgiveness programs, such as Public Service Loan Forgiveness.
Borrowers who have been repaying their undergraduate student loans for at least 20 years would be eligible to have any remaining debt canceled, along with those repaying their graduate school loans for 25 years or more.
The plan would forgive debt for those who were in college programs deemed to have “low financial value.” It’s meant to help those who were in programs that ended up losing eligibility to receive federal student aid or programs found to have cheated students.
A final category would cancel debt for borrowers facing hardships that prevent them from repaying their student loans, either because they’re at high risk of defaulting or are burdened with medical debt or child care expenses, among other criteria.
Cardona said in a call with reporters that the relief that would be provided under the new plan would be "on top of the $146 billion in student loan debt relief for 4 million Americans that we’ve already approved, more than any other administration in our country’s history.”
Hearings to craft the rule wrapped up in February, and the draft is under review. The Education Department will issue a formal proposal and open it to public comment before it can be finalized.
The White House web site released specifics Monday morning.
The plans if finalized as proposed, would deliver some amount of relief to:
- Borrowers who owe more than they did at the start of repayment. Millions of borrowers across the country owe more than they did when they started repaying because of accrued and capitalized interest. Black and Latino borrowers are likelier to experience growth in their student loan balances due to excessive interest accumulation. Four years after graduation, Black bachelor’s degree borrowers on average owe more than they borrowed.
- Borrowers who are otherwise eligible for loan forgiveness, but have not yet applied. Borrowers face administrative burdens with completing loan forgiveness applications. Many borrowers would receive automatic debt relief for loan forgiveness programs that they are eligible for but have not successfully applied for, such as the Saving on a Valuable Education (SAVE) Plan, Public Service Loan Forgiveness, or other forgiveness programs.
- Borrowers who first entered repayment many years ago. Many borrowers are repaying their loans decades after leaving school. The Administration’s new plan would cancel debt for all borrowers with only undergraduate student debt who entered repayment 20 or more years ago and cancel loans for borrowers with any graduate student debt that first entered repayment 25 or more years ago.
- Borrowers who enrolled in low-financial-value programs. Thosewho attended institutions or programs that failed accountability measures or failed to provide students with sufficient financial value would be eligible for relief, including those whose institutions closed prior to the finalization of such determinations. Black and Latino borrowers make up a disproportionately larger share of students enrolled in these programs.
- Borrowers experiencing hardship paying back their loans. Millions of borrowers could be eligible for relief if they are experiencing hardship in their daily lives that prevent them from fully paying back their loans now or in the future. Black and Latino borrowers have higher default rates than white borrowers, undermining their ability to build generational wealth, start businesses, buy homes, and more.
The plans announced Monday would address the disproportionate debt burden on borrowers of color and other vulnerable borrowers.
Black borrowers
- In order to afford a college education, Black families—already disadvantaged by generational wealth disparities—rely more heavily on student debt than white families do.
- Twenty years after first enrolling in school, the typical Black borrower who started college in the 1995-96 school year still owed 95% of their original student debt.
- After 20 years of starting school, just 26% of Black borrowers were able to pay off all of their loans.
- A disproportionate number of students at for-profit colleges are Black, and many of these students have attended low-quality programs, leaving them with unaffordable debts and low prospects.
Latino Borrowers
- Latino borrowers have lower household incomes and significantly less wealth than their white counterparts, causing them greater difficulty in paying off loans.
- Latino students are also more likely not to complete college, making them more likely to have debt with no degree.
- Latino borrowers are also more likely to default on their student loans compared to white borrowers, with 15% of those in repayment in default and 29% in serious delinquency.
- Latino students are also a disproportionate number of students enrolled in for-profit programs.
Community college borrowers
- Under the Biden-Harris Administration’s SAVE Plan, 85% of community college borrowers are projected to be debt-free within 10 years.
- Latino students make up a disproportionately larger share of community college students, making up 23% of community college enrollees but only 18% of the overall undergraduate population.
- The share of community college students who are Latino and Black students is also increasing, with 2023 community college enrollment increasing by 2.1% for Black students, 5.5% for Hispanic students, and decreasing by 2.0% for white students.
The plans announced today, together with the Administration’s past actions, will provide relief to more than 30 million borrowers. These plans would fully eliminate accrued interest for 23 million borrowers, cancel the full amount of student debt for over 4 million borrowers, and provide more than 10 million borrowers with at least $5,000 in debt relief or more. With disproportionately high debt burdens, Black and Latino borrowers will get substantial benefits from this relief.
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WASHINGTON (AP) — President Joe Biden will announce his latest effort to broaden student loan relief this week for new categories of borrowers, according to three people familiar with the plans, nearly a year after the Supreme Court foiled his administration’s first attempt to cancel debt for millions who attended college.
Biden will detail the plan Monday in Madison, Wisconsin, where the flagship campus of the University of Wisconsin is located. The actual federal regulations — outlining who would qualify to get their student loan debt reduced or eliminated — are not expected to be released then, said the people, who were granted anonymity to detail a proposal not yet made public.
Much of the specifics that Biden will discuss Monday have long been telegraphed through a negotiated rulemaking process at the Department of Education, which has worked for months to hash out the new categories of borrowers. The president announced immediately after the Supreme Court decision that Education Secretary Miguel Cardona would undertake the process because he would have the power under the Higher Education Act to waive or compromise student loan debt in specific cases.
Still, the effort seeks to make good on Biden’s promise after the Supreme Court struck down his initial plan in June, a $400 billion proposal to cancel or reduce federal student loan debt that a majority of justices said required congressional approval. Biden called that decision a “mistake” and “wrong.”
And the fresh announcement on student loan relief, a vital issue for younger voters, could help energize parts of Biden's political coalition who have become disillusioned over his job performance — people whose support the president will need to defeat presumptive Republican presidential candidate Donald Trump this year.
The plan that Biden will detail is set to expand federal student loan relief to new yet-targeted categories of borrowers through the Higher Education Act, which administration officials believe puts it on a stronger legal footing than the sweeping proposal that was killed by a 6-3 court majority last year. The planned announcement from Biden was first reported by the Wall Street Journal.
“This new path is legally sound,” Biden said in June. “It’s going to take longer, but, in my view, it’s the best path that remains to providing for as many borrowers as possible with debt relief.”
Biden's latest attempt at cancellation is expected to be smaller and more targeted than his original plan, which would have canceled up to $20,000 in loans for more than 40 million borrowers. Details of the new plan have come into focus in recent months as the Education Department brought its ideas to a panel of outside negotiators with an interest in higher education, ranging from students to loan servicers.
Through that process, the agency laid out five categories of borrowers who would be eligible to get some or all of their federal loans canceled. The plan is focused on helping those with the greatest need for relief, including many who might otherwise never repay their loans.
Among those targeted for help are individuals whose unpaid interest has snowballed beyond the size of the original loan. The proposal would reset their balances back to the initial balance by erasing up to $10,000 or $20,000 in interest, depending on a borrower's income.
Borrowers paying down their student loans for decades would get all remaining debt erased under the department's plan. Loans used for a borrower's undergraduate education would be canceled if they had been in repayment for at least 20 years. For other types of federal loans, it's 25 years.
The plan would automatically cancel loans for those who went to for-profit college programs deemed “low-value.” Borrowers would be eligible for cancellation if, while they attended the program, the average federal student loan payment among graduates was too high compared to their average salary.
Those who are eligible for other types of cancellation but haven't applied would automatically get relief. It would apply to Public Service Loan Forgiveness and Borrower Defense to Repayment, programs that have been around for years but require infamously difficult paperwork.
Under pressure from advocates, the department also added a category for those facing “hardship.” It would offer cancellation to borrowers considered highly likely to be in default within two years. Additional borrowers would be eligible for relief under a wide-ranging definition of financial hardship.
A series of hearings to craft the rule wrapped up in February, and the draft is now under review. Before it can be finalized, the Education Department will need to issue a formal proposal and open it to a public comment period.