Weekly Briefing: The Rundown on Student-Loan Forgiveness

Here are the details of the long-awaited plan announced this week by the White House. ADVERTISEMENT [Weekly Briefing Logo]( Did someone forward you this newsletter? [Sign up free]( to receive your own copy. Here’s the rundown on student-loan forgiveness. Millions of student-loan borrowers would see their debt amount reduced by $10,000 apiece under a plan announced Wednesday by President Biden. The Biden administration estimates that the move will cancel the total remaining balance for about 20 million borrowers. Here are the basics: - Student-loan forgiveness is restricted to individuals who earn less than $125,000 per year and families who earn less than $250,000. Most borrowers who meet those income limits will be eligible to have up to $10,000 in public student loans forgiven. - Pell Grant recipients, or students who have substantial financial need, are eligible to have up to $20,000 in federal student debt forgiven. - The loan-repayment pause that was put in place during the pandemic and that was slated to expire at the end of this month will instead be extended through December. Repayments will resume in January. - The U.S. Education Department said it would create an income-driven repayment plan to help reduce the portion of discretionary income that must be spent on undergraduate loans. Borrowers would be expected to pay 5 percent of their discretionary income each month instead of the current 10 percent. - Under that proposal, borrowers who originally owed $12,000 or less could have their loan balances forgiven after 10 years of steady payments instead of the 20 years now required by many income-driven plans. - Also under the income-driven proposal, loan balances would not accrue interest as long as borrowers were making the required monthly payments. Many questions remain about the plan, including [whether it can withstand]( a legal challenge. It’s unclear whether the president has the legal authority to cancel debt through executive action. Nancy Pelosi, the Democratic speaker of the House of Representatives, said in 2021 that the president [does not have the authority]( to unilaterally cancel student-loan debt. On Wednesday, the department [released a legal memo]( arguing that Secretary of Education Miguel A. Cardona, does have this authority. Cardona was with Biden for Wednesday’s White House announcement. The memo also said that a previous memo, written by the Trump administration and arguing the opposite, “was substantively incorrect in its conclusions.” Loan-cancellation opponents are likely to challenge the plan in court, but it’s unclear who will have the standing to sue. Some critics of the plan say that student-loan forgiveness is unfair to borrowers who already paid off their loans or never took them out in the first place. Others say that this one-time cancellation is a Band-Aid for the larger problem of rising college costs. There are also critics who want more debt forgiven, like the National Association for the Advancement of Colored People. The group advocated that Biden cancel $50,000 in student-loan debt, arguing that figure would help reduce the racial wealth gap. On Wednesday, the group’s president, Derrick Johnson, did say that the $20,000 relief for Pell Grant recipients moved the group closer to its $50,000 goal. [Read Adrienne Lu’s full story here](. More on student-debt relief. The road that got us to federal student-loan forgiveness was long and loopy. Just a few years ago, the idea seemed like a pipe dream, but it gained popularity, especially among liberal Democrats. [On Twitter]( my colleague Andy Thomason wrote that for some borrowers, this forgiveness signals that the deal between colleges and the public about the promise of higher education is broken. Here are some Chronicle stories that illustrate that broken promise: - [The Day the Purpose of College Changed]( - [An Era of Neglect]( - [Why Does College Cost So Much]( ADVERTISEMENT Lagniappe. - Read. If you’re into short stories where delicate situations turn sinister, read [Delicate Edible Birds,]( by Lauren Groff. (Kirkus Reviews) - Listen. 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