This plan offers targeted debt relief as part of a comprehensive effort to address the burden of growing college costs and make the student loan system more manageable for working families. Today, President Biden is announcing a three-part plan to provide more breathing room to America’s working families as they continue to recover from the strains associated with the COVID-19 pandemic. Twenty years after first enrolling in school, the typical Black borrower who started college in the 1995-96 school year still owed 95% of their original student debt. The student debt burden also falls disproportionately on Black borrowers. About 16% of borrowers are in default – including nearly a third of senior citizens with student debt – which can result in the government garnishing a borrower’s wages or lowering a borrower’s credit score. Many of these students could not complete their degree because the cost of attendance was too high. Nearly one-third of borrowers have debt but no degree, according to an analysis by the Department of Education of a recent cohort of undergraduates. Middle-class borrowers struggle with high monthly payments and ballooning balances that make it harder for them to build wealth, like buying homes, putting away money for retirement, and starting small businesses.įor the most vulnerable borrowers, the effects of debt are even more crushing.
The skyrocketing cumulative federal student loan debt-$1.6 trillion and rising for more than 45 million borrowers-is a significant burden on America’s middle class. According to a Department of Education analysis, the typical undergraduate student with loans now graduates with nearly $25,000 in debt. That has left many students from low- and middle-income families with no choice but to borrow if they want to get a degree. Federal support has not kept up: Pell Grants once covered nearly 80 percent of the cost of a four-year public college degree for students from working families, but now only cover a third. Since 1980, the total cost of both four-year public and four-year private college has nearly tripled, even after accounting for inflation. Today, the Biden Administration is following through on that promise and providing families breathing room as they prepare to start re-paying loans after the economic crisis brought on by the pandemic. During the campaign, he promised to provide student debt relief. President Biden believes that a post-high school education should be a ticket to a middle-class life, but for too many, the cost of borrowing for college is a lifelong burden that deprives them of that opportunity.
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