WATERBURY – Today, Congresswoman Jahana Hayes (CT-05), member of the House Committee on Education and Labor, released the following statement after the announcement by the Biden Administration regarding student loan debt relief.
“Today, the President delivered on his promise to millions struggling under the devastating weight of student loan debt and interest. Many of my constituents have shared their student loan horror stories and demanded reform to a system that puts profit over the promise of education,” said Congresswoman Hayes. “I am grateful for the leadership of President Biden to address the immense student debt crisis and help families succeed in challenging economic conditions. These reforms will have a lasting impact on Connecticut residents and impact those that need it most. I have pushed for a response to this crisis from the Administration, and I will continue to work with my colleagues to decrease the burden of student loan debt, reform the financial aid system, and make higher education more affordable.”
The Biden Administration Student Debt Relief plan will:
- Provide targeted debt relief to address the financial harms of the pandemic. The Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 ($250,000 for married couples). No high-income individual or high-income household above these thresholds will benefit from this action. To ensure a smooth transition to repayment and prevent unnecessary defaults, the pause on federal student loan repayment will be extended one final time through December 31, 2022. Borrowers should expect to resume payment in January 2023.
- Make the student loan system more manageable for current and future borrowers by:
- Cutting monthly payments in half for undergraduate loans. The Department of Education is proposing a new income-driven repayment plan that protects more low-income borrowers from making any payments and caps monthly payments for undergraduate loans at 5% of a borrower’s discretionary income—half of the rate that borrowers must pay now under most existing plans. This means that the average annual student loan payment will be lowered by more than $1,000 for both current and future borrowers.
- Fixing the broken Public Service Loan Forgiveness (PSLF) program by proposing a rule that borrowers who have worked at a nonprofit, in the military, or in federal, state, tribal, or local government, receive appropriate credit toward loan forgiveness. These improvements will build on temporary changes the Department of Education has already made to PSLF, under which more than 175,000 public servants have already had more than $10 billion in loan forgiveness approved.
- Protect future students and taxpayers by reducing the cost of college and holding schools accountable when they hike up prices. The Biden Administration and Congresswoman Hayes have championed the largest increase to Pell Grants in over a decade and one of the largest one-time influxes to colleges and universities. To further reduce the cost of college, they will continue to fight to double the maximum Pell Grant and make community college free. Meanwhile, colleges have an obligation to keep prices reasonable and ensure borrowers get value for their investments, not debt they cannot afford. The Department of Education is announcing new efforts to ensure student borrowers get value for their college costs.
If all borrowers claim the relief they are entitled to, these actions will:
- Provide relief to up to 43 million borrowers, including cancelling the full remaining balance for roughly 20 million borrowers.
- Target relief dollars to low- and middle-income borrowers. The Department of Education estimates that, among borrowers who are no longer in school, nearly 90% of relief dollars will go to those earning less than $75,000 a year. No individual making more than $125,000 or household making more than $250,000 – the top 5% of incomes in the United States – will receive relief.
- Help borrowers of all ages. The Department of Education estimates that, among borrowers who are eligible for relief, 21% are 25 years and under and 44% are ages 26-39. More than a third are borrowers age 40 and up, including 5% of borrowers who are senior citizens.
- Advance racial equity. By targeting relief to borrowers with the highest economic need, the Administration’s actions are likely to help narrow the racial wealth gap. Black students are more likely to have to borrow for school and more likely to take out larger loans. Black borrowers are twice as likely to have received Pell Grants compared to their white peers. Other borrowers of color are also more likely than their peers to receive Pell Grants. That is why an Urban Institute study found that debt forgiveness programs targeting those who received Pell Grants while in college will advance racial equity.