MADISON — President Joe Biden announcing his newest student loan debt forgiveness plan Monday in Madison. He traveled to Madison Area Technical College’s Truax campus.
President Biden says if his new student loan bill passes then “starting this fall, we plan to deliver up to $20,000 in interest relief to over 20 million borrowers, and full forgiveness for millions more”.
The plan affects 5 different types of borrowers:
- Borrowers who owe more than they did at the start of repayment. Millions of borrowers across the country owe more than they did when they started repaying because of accrued and capitalized interest. Black and Latino borrowers are likelier to experience growth in their student loan balances due to excessive interest accumulation. Four years after graduation, Black bachelor’s degree borrowers on average owe more than they borrowed.
- Borrowers who are otherwise eligible for loan forgiveness, but have not yet applied. Borrowers face administrative burdens with completing loan forgiveness applications. Many borrowers would receive automatic debt relief for loan forgiveness programs that they are eligible for but have not successfully applied for, such as the Saving on a Valuable Education (SAVE) Plan, Public Service Loan Forgiveness, or other forgiveness programs.
- Borrowers who first entered repayment many years ago. Many borrowers are repaying their loans decades after leaving school. The Administration’s new plan would cancel debt for all borrowers with only undergraduate student debt who entered repayment 20 or more years ago and cancel loans for borrowers with any graduate student debt that first entered repayment 25 or more years ago.
- Borrowers who enrolled in low-financial-value programs. Those who attended institutions or programs that failed accountability measures or failed to provide students with sufficient financial value would be eligible for relief, including those whose institutions closed prior to the finalization of such determinations. Black and Latino borrowers make up a disproportionately larger share of students enrolled in these programs.
- Borrowers experiencing hardship paying back their loans. Millions of borrowers could be eligible for relief if they are experiencing hardship in their daily lives that prevent them from fully paying back their loans now or in the future. Black and Latino borrowers have higher default rates than white borrowers, undermining their ability to build generational wealth, start businesses, buy homes, and more.
All of these borrowers would be encouraged to join the Saving on a Valuable Education or SAVE Plan, which is the latest income-driven repayment plan offered by the US Department of Education’s federal student aid.
Former Wisconsin Lieutenant Governor Mandela Barnes tells WTMJ how the new plan affects Wisconsinites. “There are a lot of people all across the state who’ve had to put off financial decisions like buying a house, like starting a family. This makes it so much easier for so many more people all across Wisconsin to more full participate in the economy”.
This is the President’s third stop in Wisconsin in recent months.
