What Biden’s student loan forgiveness plan means for New Yorkers

With a stroke of his pen, President Biden is set to eliminate $10,000 of student loan debt for millions of Americans, answering the political prayers of progressives who have been calling on him to take action since taking office.

The move, which does not need congressional approval, amounts to the biggest effort in history to help an estimated 45 million borrowers cope with a head-spinning $1.6 trillion in education debt. Those making less than $125,000 a year will qualify.

“This comes as a huge sigh of relief for so many New Yorkers,” said Senate Majority Leader Chuck Schumer (D-N.Y.), a key advocate. “College should be a ladder up, not an anchor holding you down.”

Each student loan borrower is eligible for up to $10,000 in debt cancellation. If you are one of 20 million people who owe less than $10,000, your entire student loan debt will be wiped clean.

Some borrowers who received Pell Grants in college will be eligible to get $20,000 in debt written off.

People making less than $125,000 a year qualify for student loan debt forgiveness. Some making higher amounts may also qualify due to some of the fine print.

The White House says 90% of beneficiaries make less than $75,000.

No. The pandemic-related pause on all federal student loan payments is now extended until January 2023.

Biden says this is the final extension he will make of the freeze on repayments, which was designed to give borrowers time to recover from the economic downturn.

No. Biden is using executive action and does not need congressional approval.

Sure looks like it.

The president has wrangled with rival Democratic factions to come up with a plan that works for all of them, or that they can at least accept.

Progressives wanted him to scrap $50,000 in debt or more. Moderates say any debt relief sets a bad precedent and could fuel inflation.

Young voters and racial justice activists typically place student loan forgiveness at or near the top of their list of political priorities.

By enacting a compromise, Biden scores a win that will certainly give Democratic voters a reason to go to the polls in November.

Critics say canceling student debt and extending the pause on repayment could fuel inflation by pumping more cash into the economy just as the Federal Reserve is trying to tighten things up to rein in rising prices.

Some also say that most of the beneficiaries of the move are middle-class or even fairly well off. They say the government should direct the cash only to the poorest borrowers or use the money for other poverty reduction plans.

Republicans trash the entire plan as a budget-busting election giveaway to Democratic constituencies.

On the other hand, advocates for debt cancelation say $10,000 is far too little to really make a difference in many graduates’ bottom line. They say the income cap is hard to enforce and may cause people making far less to miss out on relief altogether.

Sen. Chuck Schumer (D-N.Y.), one of the strongest and most persistent advocates of student loan forgiveness, has badgered Biden to enact the plan and called him as recently as Tuesday night to make sure the announcement was happening as planned.

Saying he feels the “anguish” of debt-saddled young people, Schumer called the move a “first step” and said he unsuccessfully pushed for a much more ambitious plan. He vowed to push for more debt cancellation in the future.

“It’s much better than nothing,” Schumer said. “It’s a great first step.”

Schumer scoffed at concerns that giving what amounts to a $10,000 bonus to young people could be bad economic policy.

“When young people have the ability to buy a car or a home or take a vacation,” he said, “that is good for the economy.”