In response to the financial havoc wreaked on Americans due to the COVID-19 pandemic, reports are that one of Biden’s first acts in office will be to call on Congress to forgive $10,000 in student debt for all loan borrowers. Additionally, a staffer has said that the President-elect Biden will extend the pause the government had placed on payments through the end of January as the Coronavirus surged, an option 90% of student loan borrowers have taken advantage of.
The Federal Reserve estimates that 45 million Americans owe $1.6 trillion in student loans with one in ten of them being in delinquency or default.
Borrowers are in “real trouble,” Biden has said. “They’re having to make choices between paying their student loans and paying their rent, those kinds of decisions.”
The Heroes Act—which would forgive up to $10,000 in student loan debt to economically distressed borrowers— passed the U.S. House of Representatives last May, but was held up in the Senate. Those defined as “economically distressed” include those whose adjusted gross income is less than 150% of the poverty line; borrowers in a serious delinquency of 90 or more days; and those who are in a deferment or forbearance at a cost of about $160 billion.
Should Biden forgive all student loan debt up to $10,000, the price tag would be more than twice that at $377 billion.
Biden had previously made several proposals addressing student loan forgiveness, including for students who graduated from public colleges, HBCUs or MSIs and who earn less than $125K per year, while also proposing free tuition at public schools and universities.
Many Democrats don’t believe $10,000 is enough. Chuck Schumer is calling on Biden to forgive $50,000 per borrower once he is sworn in as a form of economic stimulus. But despite a Senate majority, getting such a bill through the Senate would get face its share of challenges for Democrats given the higher taxes such action would bring.