President Biden issued sweeping student debt relief for people earning less than $125,000 a year.
The Washington Post reports:
White House officials are planning to cancel up to $20,000 in student debt for recipients of Pell Grants as part of their broader announcement on Wednesday of student debt forgiveness, four people familiar with the matter said.
The extra debt forgiveness for Pell recipients would be in addition to the expected cancellation of up to $10,000 in student debt for most other borrowers. The White House’s plans are only expected to apply to Americans earning under $125,000 per year, or $250,000 per year for married couples who file taxes jointly, the people familiar said.
Roughly 43 million federal student loan borrowers would be eligible for some level of forgiveness, including 20 million who could have their debt completely canceled, according to internal documents shared with The Washington Post. The White House estimates that 90 percent of relief will go to people earning less than $75,000.
Diane Ravitch's blog 
Wars are won one battle at a time.
Forgiving some student debt, like what Biden is doing this now, is one of those battles. And President Biden has to win these little battles while he can, before the 2022 midterm election when the Theofascist RINO Republican Party may take back the House of Representatives and then block everything good President Biden might attempt between 2022 – 2024, in an afford to make Biden look like a looser so the Theofascist RINO Republican Party might be able to fool enough voters to take back the White House and both Houses of Congress in 2024
If that happens, then the theofascists may fulfill their goal to turn the United States into a theofascist dystopian state full of racism, rage, fear, and hate.
It is not clear to me if those who consolidated their loans with a private lender will be covered. Will they? I mean, how can the government cancel a private loan?
If they have a private lender then they are SOL.
They can’t cancel a private loan…..BUT……private loans can be discharged in bankruptcy. What started this whole mess was the the bankruptcy law changed (2005?) so that education debt would not be discharged…..so then everyone ran to get private loans>which then lead to the costs of college soaring sky high.
LisaM,
If private loans to students could be discharged in bankruptcy there will not be private loans to students. The risk that students would simply declare bankruptcy at graduation at very little cost to the students would be prohibitive.
You might argue that there should not be private student loans. I don’t think that eliminating these loans, however, would lower tuition and room and board costs.
Lisa, TE:
https://www.consumerfinance.gov/about-us/blog/busting-myths-about-bankruptcy-and-private-student-loans/#:~:text=For%20too%20long%2C%20a%20myth,loans%20can%20be%20discharged%20bankruptcy.
Bob,
Did you see the types of loans that can be discharged under bankruptcy in your post?
Loans for MORE THAN THE COST OF ATTENDANCE
Loans to attend UNACCREDITED SCHOOLS
Loans used to study FOR THE BAR EXAM or other professional exams
Loans to cover MOVING EXPENSES FOR PHYSICIANS AND DENTISTS RESIDENCY
Loans to students WHO ATTEND HALF TIME
I don’t think that cardiac surgery interns are especially worried about moving expenses. I also think it is unfortunate that government policy subsidies attendance at unaccredited schools, but of course you might have a different position on this.
TEs claim that “If private loans to students could be discharged in bankruptcy there will not be private loans to students. ”
Followed by Bobs link to an article that explains that private loans to students actually can be discharged in bankruptcy.
TE again weighing in on do something he knows nothing about.
What else is new?
And incidentally, the absolute claim that “federal student loans can not be discharged in bankruptcy” is not even true, since they can be and have been under certain circumstances that are actually specified by by the relevant law.
TE should stick to his forte: tweeting about sports and poker.
And just to be clear, though not made by TE, the absolute claim that federal loans can not be discharged in bankruptcy is another common myth.
SD P…..but the hoops that one must jump through to get a federal loan (subsidized or unsubsidized) discharged in bankruptcy is time consuming AND costly. Often, it is denied. Even when discharged, the loan servicer may still continue to bill for student debt repayment because the loan has been sold so many times. The web of evil that the banking industry has become is shameful.
LisaM
I agree it’s very difficult.
But it is possible, something that most people don’t know simply because of the office repeated claim that it is NOT possible.
Another campaign promise kept.
We’ve been paying my daughter’s student loan and only owe $2400, but we will take what we can get.
Appreciate all your comments on this post!
$10,000 is great for the average affluent person who has less than $50,000 in loans – this eliminates a significant chunk for them.
But for the average low income person who had to finance every dime of their undergraduate and graduate degree, they could easily have well into the six figures of student loan debt, even from a public university. And if those low income people decided to go into fields to help their communities (as they often do), like teaching, social work, public defender, etc., they haven’t been able to pay more than the minimum monthly balance every month (especially if they live in a major city like New York or SF where average monthly rent is >$4,000), so it’s very possible that the interest is now more than the original principal. This will do nothing for them.
People in the first group are probably Biden voters to begin with. The people in the second group may or may not be and this certainly isn’t going to convince them.
Dienne,
By now, it is obvious that Biden can do nothing that would please you. By the way, the Republican Party is completely opposed to any student debt relief. Does that bother you?
The cumulative interest on these loans is a crime. Only death will appease the banks and maybe not even then.
At least Biden is attempting to fulfill his campaign promise. It’s more than any other President has offered.
Dienne77,
It is interesting to look at student loans by household income and by degree. You can see some figures here: https://educationdata.org/student-loan-debt-by-income-level
Low income households owe the least on average (bottom 25% owe $32,500) high income folks owe the most on average ( top 10% owe $58,400). If you look by degree, people who earn professional doctorates (Medical Doctors, etc) have the highest average loan at over $210,000, while the average for the BA is a little under $29,000.
So low income students are the biggest beneficiaries of Biden’s plan.
Making public colleges and universities tuition free would have been worlds better than loan forgiveness, but loan forgiveness is better than nothing, and tuition free education was off the table when Biden won the election. Bernie lost in the primaries twice. He lost, fair and square. It takes time to accept a deep loss. We need to help each other heal and get ready for the next fight, Dienne. Remember, Republicans want to eliminate public education altogether and forgive no loans of any kind ever.
It’s not that difficult to choose between a political party that offers only half of what you want and a political party that offers nothing you want or need and wants to cut programs like Medicare, Social Security and ban abortion.
LeftCoastTeacher,
Because the relatively wealthy are more likely to attend public university, this would be a transfer from taxpayers to the relatively wealthy. The median family income of students at UCLA, for example, is $104,900 while the median income of families in California is $78,672.
On reflection are you really in favor of this regressive policy?
Why do I have the suspicion that you are cherry-picking data to make a polemical point?
FYI: I believe public higher education should be free.
I don’t think Bernie Sanders could have gotten tuition free college education. I also don’t think he could have gotten M4A healthcare. I DO think he would have educated enough people so that they understood “the why” we don’t have these things. There would have been a lot more transparency and much more compromise resulting in better outcomes for the majority of people. I really don’t think that most of our elected officials in DC (both sides) wanted Bernie spilling the beans and whipping up the masses into a frenzy. Just my opinion. And yes, he lost….but I don’t think how it was done was fair.
Dr. Ravitch,
I would be very interested in any poster here who could provide evidence that that the median family income of students attending college was less than the median family income of households in the United States.
Let us look for other cherries i guess, going up the west coast and look at the east coast.
UC Berkley median family income almost $120,000
University of Washington median family income $113,000
On the east coast
SUNY Stony Brook median family income over $88,000
University of Virginia median family income over $155,000
Middle of the country
University of Michigan median family income $154,000
University of Indiana median family income over $95,000
The public university where I teach has a median family income of students of over $111,000. I understand that it is much lower than the universities where you have taught ( Columbia is $150,000 and NYU a bit less at $149,300) but I also hope that you understand that free public education is a regressive policy.
I hope that you will reconsider supporting a regressive policy.
I will post a commentary tomorrow that demonstrates that most beneficiaries of loan forgiveness are not affluent.
TEs salary is a transfer from taxpayers to the relatively wealthy.
But we don’t see him complaining about that.
I bet TE earns more than the median income in Kansas, where he teaches.
By the way, if TE wants to contest my above statement, I will happily link to his personal salary details for the last several years.
Ha ha ha.
Diane
FYI
What used to be called “cherry picking” is now referred to as ” chetty picking.”
It’s one of the advantages of being a famous statustician. People name (and sometimes rename) powerful mathemagical techniques in your honor.
And that’s a pretty safe bet you made, given that all the needed information is publicly available online.
Dr. Ravitch,
My comment here was directed at LeftCoastTeacher’s proposal that public colleges and universities be made tuition free, not at student loan forgiveness. As I pointed out in my earlier post, the $10,000 or $20,000 student loan forgiveness would have a much bigger impact on relatively low income households than high income households, making it a progressive policy.
LeftCoastTeacher’s proposal would have the opposite impact. Lets take University of Michigan. U of M, through the Go Blue Guarantee Program, pays the full tuition and required fees for all in state students coming from a household earning $65,000 or less and with less than $50,000 in assets (see https://goblueguarantee.umich.edu). LeftCoastTeacher’s proposal would provide no help at all to these students. Students from more wealthy households get less financial aid, so LeftCoastTeacher’s proposal would help that group, with the public payment increasing with the income of the household. The biggest beneficiaries would, of course, be those that now pay the full annual out of state tuition of $55,300 for the first two years and $59,212 for the last two years.
The wealthiest households of the University of Michigan students will save $240,000 while the poorest households of the University of Michigan students will save $0. It is an extremely regressive policy.
I misunderstood your comment. I thought you were calling the Biden plan a boon for the rich. It is not and I’m glad you agree.
Teachingeconomist:
Wealthier people attend public colleges and universities because they are not free. If the schools were tuition free, people with less wealth would gain access without going into insurmountable debt. Are you trying to say that only wealthy people would ride in limousines even if the rides were free? Come on.
You’re an economist? Don’t economists know that when you lower the cost of something, more people can afford it? That seems like some basic economics. Seriously, what’s wrong here?
P.S. Thank you, Diane, for letting me know these comments by TE were here.
Whoever programs WordPress moderation algorithms should pay full tuition, but only they should.
Also, as an addendum to my reply that went into moderation because I directly referred to TE by username, what harm would it do to lessen the financial burden of education for the shrinking upper middle class? Everyone who works for a living is paying too much to educate their children.
All of these points are moot, however, as billionaires and wealthy corporations have a stranglehold on our rigged economy and will never allow democracy to flourish.
Finally, I will add that the education of every citizen benefits all of us, not just the individual citizen. Tuition free schools would have been a worthwhile investment for everyone. Oh well.
That’s why the GI Bill of Rights was such a great program. Millions of dollars for higher education. A great investment for them and the nation.
LeftCoastTeacher,
I think relatively wealthy households are attracted to public universities like the University of Michigan, UCLA, Berkeley, UVA, and others because they are outstanding institutions with an excellent faculty and outstanding student bodies. If you do not think this is true, we will just have to disagree about this.
What I hope we can agree upon is that if a household is not currently paying tuition, reducing tuition to nothing does not benefit that household. If the household is currently paying a two hundred thousand dollars in tuition, reducing that payment to nothing would be worth two hundred thousand dollars. Can we at least agree on that?
Dr. Ravitch,
You might be interested in this paper about the impact of the GI bill on women’s education by Claudia Goldman, Lawrence Katz, and Ilyana Kuziemko in the Journal of Economic Perspectives from some years ago: https://www.jstor.org/stable/30033687
I studied the GI Bill and it’s effects for my book “The Troubled Crusade: American Education, 1945-1980.”
TE, you’re arguing that everyone in the country who doesn’t make lots of money gets free tuition. Come on.
TE, your argument about the GI Bill is trolling, distracting from the argument. You’re trying to change the subject.
Diane’s point about the GI Bill was spot on snd you know it.
LeftCoastTeacher,
I think you are mischaracterizing my statement of the facts. I claim that for students who attend public colleges and universities, the lower the family income the lower the net tuition. I would be very interested in any evidence to the contrary.
I am curious about what you thought about Claudia Goldman’s article I referenced. I am certainly impressed that it only took you read it so quickly.
I didn’t read it because I retired from the NYU faculty and do not have a free account. Don’t feel like paying to read it.
Dr. Ravitch,
JSTOR is a great resource. Here is how you can get free access to articles: https://support.jstor.org/hc/en-us/articles/115004760028-How-to-Register-Get-Free-Access-to-Content. If you hold a New York Public Library Card, there you have more access here: https://www.nypl.org/research/collections/articles-databases/jstor
I hope this will be useful to other readers of the blog.
I am heartened that WestCoastTeacher has access to JSTOR. I am interested in his/her/there criticism. of the paper.
“The lower the income the lower the tuition” is neither factual nor germane.
How do they do it in Russia?
Why should we care? I’d be more interested in how they do it in Scandinavia and other Euro countries where tertiary education, if not free, is very low-cost.
Biden may have made the decision based on helping the economy and college-educated working people. Ascribing it to political motivation is the talking point of the right wing.
All student loans that have compound interest should be immediately converted to simple interest at the prevailing personal loan rate — and all interest that has been added to any loan as a result of Compound Interest must be removed from the loan balance. Compound interest has resulted in people OWING MORE ON THEIR LOANS THAN THEY BORROWED IN THE FIRST PLACE in spite of faithfully making payments each month. That’s EVIL!!!
Let us read no more on this blog about democratic norms being violated by Trump or other conservatives. A few months ago Nancy Pelosi said publicly that no President has the legal authority to forgive this type of debt like Biden is trying to do without specific permission from Congress. Some other Democrats said the same thing, as have many legal experts. Biden himself was dubious for a long time, but he sees this action as helping Democrats in the mid-term election.
Nowhere in this proposal is there even a syllable about the need to drastically downsize the bloated administrative staffs in higher education, and about the fact that far too many young people are shoehorned into starting college (and soon dropping out) when they are not motivated and/or academically capable of benefiting from genuine college-level education. Western European countries have free or low cost college, but they enroll a much lower percentage of young people in college; students in Europe have to actually be qualified to attend college.
Of course, the college-industrial complex will never be reformed by Democratic politicians – they receive too many campaign bribes and too many votes to even consider reforming the current college system.
Yep! This is just putting a bandaid on a bullet hole. It WILL help a few people but until the systemic problems are dealt with at the college level, the debt problem will continue to grow. I’m all for some debt reduction for the middle class and poor, but what about promoting and offering free community college for some OR offering reductions in costs for obtaining certain degrees and working in that field for 4-5 yrs.
I’m lost. First you argue that a president can’t unilaterally override Congress and that makes today’s news bad. Then in the next paragraph you complain that an agenda which obviously does require significant action by Congress was not declared unilaterally by the president. Very confusing. Which is it?
And please give us pertinent, relevant examples of how this leads to a declaration of, “Let us read no more on this blog about democratic norms being violated by Trump or other conservatives.” If you can do that, it will be a monument to both-siderism and qualify you to replace David Brooks at the NYT!
Nancy Pelosi and almost all legal experts said months ago tha Biden cannot legally do what he proposed today. Why is that difficult for you to understand?
“Almost all legal experts” is the blogging handle of Supteme Court Justice Clarence Thomas, for those who may not be aware.
In order to accomplish what you complain about leaving out in your second paragraph, it would require adopting exactly the opposite philosophy of what you complain about in your first paragraph. What’s logical about that?
I don’t think that colleges are a big source of campaign contributions as compared to banks, the real estate industry, or the fossil Fuel industry.
Colleges are a bigger recipients of pork and jobs–mostly good–than they are sources of campaign cash.
One of my daughters has a learning disability – she’s intelligent but it takes her twice as long as someone else to learn the material. In fourth grade her resource teacher told her she could never go to college. She was determined to prove that woman wrong and graduated with a degree in psychology and is now a paramedic with future aspirations.
In Europe she would never have been eligible to pursue a higher education.
That’s what makes America great – freedom to chose your own path.
Don’t lump everyone in together. Some try and fail, then try again. Some rise above expectations. As a society, it’s our job to encourage them to reach their full potential. Yes, there are issues, but isn’t that why we are here on this blog? Let’s try to find answers to make life more equitable for the upcoming generation – our kids and grandkids.
flos56: So glad your daughter is a successful person…in spite of her 4th Grade Teacher!!! (An L.D. Resource Teacher telling a student she could never go to college? That person should NOT have been a teacher, let alone an L.D. Resource Teacher. That’s what I was for the last 13 years of my teaching career, & I can’t imagine ever telling a student something so ignorant & hurtful…& just plain untrue.)
&…I’m sure your good parenting has had a great deal to do with her success. Kudos to you & to your family, flos56.
Flo56– I’m so glad for your daughter’s success. Congratulations & kudos.
But what’s the basis for this: “In Europe she would never have been eligible to pursue a higher education”?
They sort the kids out at age twelve on who can go for higher education and those who can’t. They also do this in Asian countries.
“Trump and other conservatives”
I couldn’t get past that hilarious phrase. As though Trump were interested in conserving anything except Trump. As if there were anything remotely conservative about this utterly dishonest, utterly nihilistic extremist.
I think back to the Dole/Kemp ticket. I rarely agreed with them, opposed their candidacy, but still had great admiration for each. Even though I thought Kemp was wrongheaded in his approach to poverty in America, I never questioned his sincerity about actually wanting to do something. Each understood–sadly Dole to a lesser extent as his ambition for the presidency took hold–the wide gulf between politics and policy was connected by something elemental to American identity.
A different time. We are so, so far away from that time now!!!
Trump is not a Conservative but a Prerequisite.
He is constantly trying to preserve himself.
And when he died, hexwill be like the Egyptian Pharaoh’s, preserving himself for all eternity.
Preservative
Sorry, my bad. I totally didn’t think about Trump’s wanting to conserve a) statues to slavers who committed treason by conducting armed rebellion against this country, and b) the reign of murderous Chekist war criminal Vladimir Putin.
We better all hope that Democrats or Republicans have a plan to reduce the cost of medical training for doctors.
Rich people’s offspring may not be willing to go into the field in sufficient numbers for Ted to get an appointment for medical care.
The GOP always identifies problems wrongly then, doubles down with the wrong solutions.
Real estate and medical insurance are the big gorillas in the room. Growing student debt could threaten the entire economy as one leg of a stool that totters and falls, taking a whole lot of other things with it.
Medical debt in this country is another gigantic gorilla. More than 100 million people in America including 41% of adults have been pushed into medical debt from our for profit healthcare system.
It’s truly obscene. People love their private insurance until they actually try to use it for something big.
Indentured servitude is alive and well in America.
And in many states you can still be mailed for not paying off debts.
Jailed
PPP business loan forgiveness wasn’t discussed/publicized as much as student debt relief. Wonder why?
PPP was legislated in response to a pandemic that no one could have foreseen. Student loan debt was willingly taken on by the borrowers. Is this reasoning too hard to understand?
I wouldn’t call it willingly, the debt was a necessary evil if they were to attend college. Unless you are wealthy, the average family does not have that kind of extra cash to pay for today’s college tuition – even with financial aid.
That’s why some young adults think twice about college. My daughter had two years into getting her certification as a PA, but couldn’t afford to support herself while doing the internship (and paying the exorbitant tuition) – even with our help. So she stuck with the degree/career she had and gave up on her dream. (She still owes a ton of money in student loans and $20,000 won’t pay it off – although it will help).
In the United States, the sons and daughters of the wealthy, regardless of merit, get college paid for by Mommy and Daddy. The sons and daughters of everyone else have to take out massive amounts in loans. If they don’t, they will be forever barred from any but menial occupations. In Europe college is mostly free to those who have demonstrated the intellectual ability. BIG difference.
Is this reasoning too hard to understand?
Society as a whole benefits from having an educated populace, and so it should pay for that education.
Is this too hard to understand?
But then again, if the populace were educated, Trump and his ilk would get nowhere. There is a reason why Trump says, “I love the uneducated,” because they love him back. Because they haven’t a clue that he despises people like them. Because of their jingoistic, idiotic notions about freedumb.
Ted,
That doctor that you and your family are relying on- did he or she take on a huge financial risk to become a doctor or was the person born with a silver spoon in his/her mouth?
What makes you think that smart people will choose medical professions in sufficient numbers in the future to match demand? Oh wait, you want your medical care to be a sellers market.
Even if I knew nothing else about it other than that it pissed off Mitch McConnell, I would know it must have sone redeeming qualities.
It’s called the Mitch Pissed Measure
When Mitch turns beat red and starts sweating profusely and steam starts coming from Mitch’s head, you know it’s a really good executive order.
That’s called the Mitch Stroke Measure.
We need more of the latter.
Personsonally, i’d like to see the Mitch Geyser Measure where the steam pressure builds up go the point of release.
That he blows!
I may be going against the grain here, and to be fair I think this is good, but it is no where near what needs to happen.
Every single teacher I know when they talk about their student loans say three things:
1) They are now in their 21st year (or some other godawful time frame) of paying them off.
2) They are not qualified because they were forced to borrow through a bank.
3) They only know they are not qualified for the current (or any) round of loan forgiveness because they only told after they filled out the mammoth amount of paper work (which was akin to buying a house). It was as if they wanted to make this as difficult as possible… Maybe…
eclark57– I’m not sure if I understand you completely. But I am remembering that my eldest, and briefly my middle son—both during Bush admin [which corresponds to “21 yrs ago” cited by your friends] had to sign on to Stafford loans that were administered by private banks, as opposed to Fannie/ Freddie [to which Stafford loans returned under Obama admin]. Those were the worst loans for our family: 6.8%, while bank interest rates were tumbling: during the exact same period, we were re-financing our home loan down to 4.3%…
What I mean is that this is not nearly enough. 10 or 20 thousand is not going to get it. And yes, I had the Stafford the Pell, and the any other loan that was available to me. However after a masters degree, and most of doctorate that required another set of loans which have switched hands so much, and had the interest compounded over the course of 21, 22, 23,24, 25, 26, 27…. years (as cited by [my] friends) there are so many loopholes available for denial of eligibility. Loopholes which will be utilized…
“As cited by [my] friends… ” (I might include myself in this- forgive my arrogance… ) But every student loan forgiveness program, and this will be no exception I suspect, is fraught with requirements. “As cited by [my] friends… ”
-Did you attend a state university?
-Interest will not be forgiven.
-Did you teach math and science (Because
-Did you teach only math and science (This ia special way of making sure all elementary, and half of middle school teacher are excluded)
-Did you teach in an inner city, impoverished, title one, etc school.
-Do you teach in that school now? (this is a special way of excluding teachers who have changed schools)
-You principal needs to sign this special paper (this a good way of making sure that teachers who have not paid homage to the power structure are left out)
To state my point again, it’s just not enough. It’s a step a good direction, but It doesn’t come even close recognizing the true need.
Thanks for details. Good lord. So that’s how they do it.
from the White House:
If all borrowers claim the relief they are entitled to, these actions will provide relief to up to 43 million borrowers, including cancelling the full remaining balance for roughly 20 million borrowers.
That’s truly significant. It makes a difference to nonwealthy people whether there is a Republican or a Democrat in the Oval Office. A big difference.
If we can subsidize Big Oil, Pharma and chip manufacturers among others, why not invest in some needy students.?
Because they don’t make campaign contributions to the pigs who have taken over the big house.
The government shouldn’t be subsidizing big busine$$ period! I remember the days of government being the regulator of big busine$$ so that the common man/taxpayer wasn’t used and abused. Our tax dollars should be used to improve the “human condition” and not to provide profit for the already wealthy (who don’t pay their fair share in taxes).
But where would American “Capitalism” be without government subsidization?
In America , a corporation without a government subsidy is like a day without sunshine.
The problem is that if you start giving students crumbs, pretty soon they will start demanding an actual piece of the pie.
Much better to just starve the mice.
Dear mice don’t est pie.
Dead mice don’t eat pie
Or cheese, for that matter.
They don’t Even get to eat the small piece of cheese in the trap before they die.
Which is damned good thing customer then you can use the cheese to kill multiple mice.