On April 13, Sen. Elizabeth Warren held a hearing on the current state of student loan debt in the United States and how borrowers would be impacted by broad student loan forgiveness — a prospect she and other Democrats have pushed President Biden on in recent months.
Before the hearing, she requested new data from the Department of Education, which shows how millions of borrowers could have their full balances forgiven if Biden were to pass legislation around student loan cancellation.
More than 15 million borrowers could see total federal student loan forgiveness
In late 2020, Biden proposed canceling $10,000 of federal student loan debt for all borrowers. Since then, progressive Democrats, notably Sen. Elizabeth Warren, have pushed Biden to increase that number to $50,000. While Biden has opposed that figure, he hasn’t entirely written off forgiving an amount higher than $10,000.
With the Education Department’s new data, we have a chance to see exactly what those numbers would do for federal borrowers. According to the report, roughly 33 percent of the 45 million student loan borrowers would see their federally backed debt completely erased under Biden’s plan, while 80 percent would see their debt erased under Warren’s plan. Here’s how those numbers break down based on varying levels of forgiveness:
- $10,000 cancellation: approximately 15 million borrowers.
- $20,000 cancellation: approximately 24 million borrowers.
- $30,000 cancellation: approximately 30 million borrowers.
- $40,000 cancellation: approximately 33.5 million borrowers.
- $50,000 cancellation: approximately 36 million borrowers.
This is particularly significant for borrowers in default or delinquency, roughly 4.6 million of whom would see their entire federal loan balances forgiven under Biden’s $10,000 plan. That number rises to 9.8 million under Warren’s proposed $50,000 plan.
Student loan forgiveness also has distinct benefits for borrowers with long-standing debt, whose student loan balances may negatively impact their overall financial health and ability to borrow other credit. According to the report, of the 4.4 million borrowers who have been in repayment for more than 20 years, more than a quarter would see their entire balance finally wiped away under Biden’s plan, and more than two-thirds under Warren’s plan.
Is student loan cancellation in the cards?
Biden recently asked Secretary of Education Miguel Cardona to oversee a legal review into his authority to forgive student loans without congressional approval. The review period is expected to last a few weeks; if the Biden administration does have the authority to enact an executive order, Biden could more seriously evaluate if, and how much, he wants to forgive.
Of course, student loan cancellation won’t help everyone. Regardless of the amount, many borrowers will receive only partial forgiveness, and borrowers with private student loans won’t see their balances reduced. But for some, such sweeping measures could pave the way for a better financial future.