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WASHINGTON — President Joe Biden announced Wednesday his plan to provide student loan relief for “those who need it the most,” a move that drew dismay from South Dakota’s Republican congressional delegation.
The three-part plan delivers on a Biden promise — one he repeatedly made during his campaign against former President Donald Trump — to cancel student loan debt for low- and middle-income borrowers.
Under the plan, qualifying individuals would be eligible for $10,000 or $20,000 in debt cancellation, depending on if they received a Pell Grant, while also extending the pre-existing pause on student loan repayment.
The move — which would only be available to individuals making $125,000 or less and households making up to $250,000 — is estimated to cost U.S. taxpayers approximately $300 billion, according to an Aug. 23 impact study published by the University of Pennsylvania’s Wharton School of Business.
In response to Biden’s announcement, Rep. Dusty Johnson, R-S.D., said the move only offers a free pass to borrowers and that the decision will contribute to the nation’s continuing struggle with inflation.
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“This decision is a slap in the face to the millions of Americans who did the right thing and paid off the student debt they willingly took on,” Johnson said in a statement issued ahead of the president’s Wednesday afternoon address. “Where is their $10,000 free pass? The administration’s willingness to spend, spend, spend is baffling – President Biden is making inflation worse with every stroke of his pen.”
Adding that the decision is a short-term move, Johnson called the forgiveness of loans a “political giveaway.”
“Congress should focus on long-term solutions to the high cost of education,” Johnson continued. “This is nothing more than a political giveaway as Democrats look down the barrel of a Republican majority come November.”
Minutes after a White House broadcast announcing the move concluded, Sen. John Thune, R-S.D., took to Twitter, where he called the move unfair to those who never borrowed in the first place.
“The president’s plan to forgive student loans is incredibly unfair to those taxpayers who never incurred student that because they didn’t attend college in the first place, or because they either work their way through school or their family pinch pennies and plan for higher education, and it will do nothing to address the problems that actually created this crisis,” Thune said. “Regrettably, Democrats have made it clear that they do not have a serious plan to lower the cost of higher education and instead support putting taxpayers and working families on the hook for billions of dollars of student loans in a blatant political pay off.”
As of 3:30 p.m. Wednesday, Sen. Mike Rounds, R-S.D., had not issued a formal statement.
What are the specifics of Biden’s plan?
According to a fact sheet released by the Biden administration, the plan offers “targeted debt relief as part of a comprehensive effort to address the burden of growing college costs and make the student loan system more manageable for working families.”
Under the plan, 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.
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In an attempt to ensure a smooth transition to repayment and prevent unnecessary defaults, the pause on federal student loan repayment will be extended through the end of the year, with borrowers resuming payment in January 2023.
It also aims to make the student loan system more manageable for current and future borrowers by capping payments for undergraduate loans at 5% of a borrower’s discretionary income and by proposing a rule that better credits qualifying individuals under the Public Service Loan Forgiveness Program.
According to the Biden administration’s fact sheet, the program could cancel the entirety of debts owed by roughly 20 million borrowers, with about 23 million more seeing partial relief.
Federal monies to cancel these debts will largely be directed to low- and middle-income borrowers, with 90% of expected relief recipients making under $75,000 per year. The Department of Education says that no individuals or households making over $125,000 and $250,000, respectively, will receive forgiveness.
Sectioning by age, the Department of Education estimates that, among borrowers who are eligible for relief, 21% are 25 and under, while 44% are ages 26-39. More than one-third are borrowers 40 and up, including 5% of borrowers who are senior citizens.
According to Biden, the Department of Education will release an application form in the coming weeks.
