Department of Education to ‘Cancel’ $39 Billion in Federal Student Loan Debt
More than 800,000 borrowers will have their student loan debt eliminated by the Department of Education, which announced Friday that it plans to “cancel” $39 billion dollars in the next month.
In a press release announcing the loan forgiveness, the Department of Education stated that the White House “has approved more than $116.6 billion in student loan forgiveness for more than 3.4 million borrowers.” Eligible borrowers are those whose federal loans are owned by the Department of Education, who are enrolled in income-driven repayment plans, and who have been paying back their loans for 20 or 25 years, depending on the nature of their loan.
Education Secretary Miguel Cardona released a statement following the announcement, calling the move a “historic step.”
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” the Secretary’s statement continued.
Last year, the Biden administration promised up to $10,000 in federal student loan forgiveness for students who make less than $125,000 per year, a move that was later overturned by the Supreme Court. Under the President’s debt forgiveness plan, Pell Grant recipients would have been eligible to receive up to $20,000 in student loan forgiveness. The White House, at the time, argued that it had the authority to forgive student loans under the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act), a COVID-19 emergency response policy.
In a 6-3 ruling, the Supreme Court struck down the $430 billion program and upheld that the executive branch alone cannot unilaterally forgive student loan debt.
Prior to the introduction of the forgiveness plan, the former Speaker of the House, Nancy Pelosi, also stated, “People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”
The unprecedented move taken Friday by the Department of Education has already received countless reactions from social media users, who are widely polarized on the topic.
Twitter user Lauren Witzke wrote, “Student loans are entrapment and should be forgiven. American birthrates are the lowest they’ve ever been and it’s because young families can’t afford to get married and have children. Student loan forgiveness will help with that.”
“They know this will take 2 years to make its way up through the courts,” Abe Hamadeh, former Army Reserve Intelligence Captain and Arizona attorney stated on Twitter. Another Twitter user wrote, “America’s national debt is over $32,500,000,000,000+ This is insanity.”
Only 17.4 percent of Americans currently have student loan debt, and the majority of debt holders continued their education after receiving a bachelor’s degree. Dental, medical, law, and MBA graduates currently hold the lion’s share of the debt; however, these professionals are also among the top earners in the U.S. with a median salary sitting around $100,000 across the country.
Aside from the legal concerns raised by an executive department’s unilateral decision to cancel student loan debt, there are also ethical questions that U.S. citizens feel have been left unanswered. Lower-income taxpayers who opted out of higher education and therefore did not take out student loans will be penalized and forced to fund irresponsible lending practices and spending done by a low percentage of Americans.
Eligible borrowers under the Department of Education’s plan will receive email notifications starting today that they qualify to receive student loan debt forgiveness, according to the Department’s official statement.
