New Bill Would Cancel $25,000 in Student Loans

Number of the Day

That’s how much people with federal student loans could have wiped from their balance under a new legislative bill that stakes a middle ground between two previous proposals.

Progressive lawmakers have recently renewed calls on President Joe Biden to use his executive powers to cancel $50,000 of debt per borrower—without going through Congress. However, Biden, who backed the idea of forgiving at least $10,000 per borrower when he was campaigning for president, has taken no action thus far. The $25,000 proposal, part of a new bill that would require Congressional approval, is a middle ground.

“We know education can change a person’s means and access to wealth,” Democratic Rep. Vicente Gonzalez of Texas said in a statement Monday announcing the bill. “Pursuing higher education should not require students and families to jeopardize their financial stability or futures. I am proud to introduce this legislation and take this major step to prevent this crushing debt from stifling the American Dream.” 

The bill would give $775.5 billion of debt relief to 45.4 million federal student loan borrowers, Gonzalez estimated.

Instead of blanket forgiveness for every borrower with a federal student loan, the Biden administration so far has taken a piecemeal approach, granting specific groups of borrowers forgiveness for varying reasons. 

All told, the Education Department under Biden has canceled about $16 billion in loans: $7.8 billion for disabled borrowers, almost $5 billion for public servants, $1.2 billion for students of ITT, a chain of for-profit colleges that closed in 2016, and as part of a new announcement Wednesday, $415 million worth of loans for former students of DeVry University and other institutions who allegedly mislead them about their job placement record or other things. (DeVry spokesperson Donna Shaults said the government mischaracterized their advertising.) 

Borrower advocates last week asked the administration to make borrowers with income-driven repayment plans next on the list for a cancellation.

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