That morning, Biden tweeted several details of his plan and said he would speak at length on the issue that afternoon. According to that tweet, student loan forgiveness would apply only to those earning less than $125,000 a year.
Students who attended college on federal Pell Grants would receive $20,000 worth of forgiveness, while those without Pell Grants would receive $10,000.
There will also be one more pause on student loan repayment through the end of 2022, and for those with undergraduate loans, monthly payments can be capped at 5 percent of monthly income.
In a press conference at the White House, Biden discussed his plan in greater detail.
He reiterated the same numbers he tweeted earlier, noting that “about 90 percent of the eligible beneficiaries” of the forgiveness program “make under $75,000 a family.”
“95 percent of the borrowers can benefit from these actions; that’s 43 million people. Of the 43 million, over 60 percent are Pell Grant recipients; that’s 27 million people who will get $20,000 in debt relief. Nearly 45 percent can have their student debt fully canceled; that’s 20 million people who can start getting on with their lives.”
Biden asserted that the program would not contribute to the federal spending deficit. “Last year, we cut the deficit by more than $350 billion,” he said. “We’re on track to cut it by more than $1.7 trillion by the end of this fiscal year.”
He also stated that the Inflation Reduction Act would lower the cost of prescription drugs for Medicare, cutting the deficit by $300 billion over the next decade and over $1 trillion over 20 years.
“There’s plenty of deficit reduction to pay for the programs many times over.”
Whereas right now student loan borrowers have to pay 10 percent of their monthly discretionary income to their loan, Biden proposed to cap that at 5 percent. He also proposed that after 20 years, or 10 years for borrowers with an original balance of less than $12,000, the remaining debt would be forgiven.
According to the Department of Education (DOE), Biden’s program will also “Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level — about the annual equivalent of a $15 minimum wage for a single borrower — will have to make a monthly payment.”
Biden reiterated his argument that, “12 years of universal education is not enough. I’m going to continue to work for universal pre-K for every three and four-year old, and universal community college for education beyond high school.”
The president also laid out his reforms for the Public Service Loan Forgiveness Program, which forgives student loans for those in public service like school teachers, police officers, and members of the military who have paid their loans for 10 years, “even if it’s not consecutive years.”
According to Biden, the steps his administration has taken so far has canceled “more than $32 billion of student debt for 1.6 million borrowers.”
Biden also criticized Republicans who disagreed with his program, claiming the GOP “voted for a $2 trillion tax cut that mainly benefited the wealthiest Americans and the biggest corporations” and this tax cut contributed to the federal deficit. He also commented that Republicans supported loans for small businesses during the COVID-19 pandemic.
In response to a reporter’s question about whether or not debt forgiveness was fair to those who never took out loans, Biden asked, “Is it fair to people who in fact do not do not own multi-billion dollar businesses to see one of these guys getting all the tax credits?”
The Department of Education also noted the plan would “Cover the borrower’s unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments — even when that monthly payment is $0 because their income is low.”
According to a DOE memo dated August 23, due to the HEROES Act passed after the September 11 attacks, the secretary of education possesses “broad authority to grant relief from student loan requirements during specific periods (a war, other military operation, or national emergency, such as the present COVID-19 pandemic) and for specific purposes (including to address the financial harms of such a war, other military operation, or emergency).”
“In present circumstances, this authority could be used to effectuate a program of categorical debt cancellation directed at addressing the financial harms caused by the COVID-19 pandemic.”
The secretary “is not required to determine or show that any individual borrower is entitled to a specific amount of relief, and he instead may provide relief on a categorical basis as necessary to address the financial harms of the pandemic.”
Shortly after Biden’s original tweet, the Republican National Convention Research account tweeted a video of Speaker of the United States House Nancy Pelosi (D-CA-12) explaining, “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.”
According to the RNC, that statement was made in April 2022, but it was actually made in July 2021.
The day of the announcement, Pelosi described the plan as “bold action” and “a strong step in Democrats’ fight to expand access to higher education.”
At a CNN town hall in February 2021, Biden explained that he does not have the power to forgive all student loan debt as some progressives members of his party have called on him to do.
In response to an attendee asking for $50,000 worth of forgiveness, Biden stated, “I’m prepared to write off a $10,000 debt, but not 50… because I don’t think I have the authority to do it by signing the pen.”
Biden explained that he did think community college, as well as state college for students from families making less than $125,000, should be free to attend. “So I don’t think anybody should have to pay for that,” he said, but for those with loans at the moment, “I do think you should be able to work it off.”
On April 1, 2022, U.S. Secretary of Education Miguel Cardona tweeted that he was meeting with Senators Chuck Schumer (D-New York) and Elizabeth Warren (D-Massachusetts), NAACP President Derrick Johnson, and “students” to create “a plan focused on addressing student loan debt.”
After Biden’s tweet announcing the new plan, Senator John Cornyn (R-TX) retweeted Texas Congressman August Pfluger (R-TX-11), who wrote, “These debts aren’t being ‘forgiven.’ They’re being paid for by you, the American taxpayer.”
Cornyn later issued a statement reading, “The Biden Administration’s election-year stunt to force working class folks to pay off the debt of wealthy graduates is both indefensible and nonsensical.”
Senator Ted Cruz said that Biden’s response to the reporter’s question about the program’s fairness was “Completely out of touch.”
“And what a terrible answer— if you can even call it an ‘answer.’”
Cruz issued a statement later reading, “The highest concentration of student loan debt is held by people in Washington, DC.”
“This administration’s policy is to force blue-collar workers and American families across the country to pay off the cost of a Washington bureaucrat’s college degree – it’s morally bankrupt.”
Cruz stated the policy was unfair to those who paid for college without taking out student loans, and that the debt relief “will cost every taxpayer an average of $2100. Someone will pay the price for this policy and the price is likely to be felt by every American in the form of even higher inflation.”
Congresswoman Mayra Flores (R-TX-34) wrote on Twitter, “Biden takes executive action that will cancel $10K of student-loan debt, but fails to mention the projected $300B it cost taxpayers that translates to more than $2K per taxpayer.”
“As inflation continues to drain the pockets of Americans, this disastrous policy would incentivize universities to raise tuition and unfairly punish those who sacrificed to pay off their own student loans.”
The Department of Education will release more information on the program in the next few days and weeks.
At the end of the press conference, a reporter asked Biden if he had any foreknowledge of the Federal Bureau of Investigation’s raid on former president Donald Trump’s Mar-a-Lago residence. “I didn’t have any advanced notice — none, zero, not one single bit,” Biden responded.
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