On April 13, Senator Elizabeth Warren held a hearing on the current state of student loan debt in the United States and how borrowers would be affected by broad student loan forgiveness — a perspective on which she and other Democrats have pushed President Biden in recent months.
Prior to the hearing, she asked new data from the Department of Education, which shows how millions of borrowers could have their full balances forgiven if Biden passes student loan forgiveness legislation.
More than 15 million borrowers could see full federal student loan forgiveness
At the end of 2020, Biden proposed cancellation of $10,000 federal student loan debt for all borrowers. Since then, progressive Democrats, including Senator Elizabeth Warren, have pushed Biden to increase this number to $50,000. Although Biden objected to this figure, he did not entirely rescind the pardon for an amount greater than $10,000.
With new data from the Department of Education, we have a chance to see exactly what those numbers would do for federal borrowers. According to the report, about 33% of the 45 million student borrowers would have their federally guaranteed debt completely erased under Biden’s plan, while 80% would have their debt erased under Warren’s plan. Here’s how those numbers break down based on different levels of forgiveness:
- Cancellation of $10,000: approximately 15 million borrowers.
- Cancellation of $20,000: approximately 24 million borrowers.
- Cancellation of $30,000: approximately 30 million borrowers.
- Cancellation of $40,000: approximately 33.5 million borrowers.
- Cancellation of $50,000: approximately 36 million borrowers.
This is especially important for defaulting or delinquent borrowers, about 4.6 million of whom would have their entire federal loan balance forgiven under Biden’s $10,000 plan. That number jumps to 9.8 million under Warren’s proposed $50,000 plan.
Student loan forgiveness also has distinct advantages for borrowers with long-standing debt, whose student loan balance may negatively impact their overall financial health and ability to borrow further credit. According to the report, of the 4.4 million borrowers in repayment for more than 20 years, more than a quarter would see their entire balance eventually wiped out under Biden’s plan, and more than two-thirds in part of Warren’s plan.
Is student loan forgiveness in the cards?
Biden recently asked Education Secretary Miguel Cardona to oversee a legal review of his authority to cancel student loans without congressional approval. The review period should last a few weeks; if the Biden administration has the power to issue an executive order, Biden could more seriously assess whether, and how much, he wants to forgive.
Sure, Student Loan Forgiveness Won’t Help Everyone. Regardless of the amount, many borrowers will only receive partial forgiveness, and borrowers with private student loans will not see their balance reduced. But for some, such drastic measures could pave the way to a brighter financial future.
