White House to cancel up to $20,000 in debt relief for Pell Grant recipients

cigaretteman

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White House officials are planning to cancel up to $20,000 in student debt for recipients of Pell Grants as part of their broader announcement on Wednesday of student debt forgiveness, four people familiar with the matter said.

The extra debt forgiveness for Pell recipients would be in addition to the expected cancellation of up to $10,000 in student debt for most other borrowers. The White House’s plans are only expected to apply to Americans earning under $125,000 per year, or $250,000 per year for married couples who file taxes jointly, the people familiar said.

Roughly 43 million federal student loan borrowers would be eligible for some level of forgiveness, including 20 million who could have their debt completely canceled, according to internal documents shared with The Washington Post. The White House estimates that 90 percent of relief will go to people earning less than $75,000.






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The president is also expected to announce that he will extend a pandemic-era pause on federal student loan payments that was first implemented under the Trump administration. That moratorium will now be extended until Dec. 31, or beyond the midterm elections, the people said.
The people spoke on the condition of anonymity to reflect private White House conversations and cautioned the details could change. President Biden is returning to Washington for the announcement today.
Who has student loan debt in America?
The announcement would put to rest months of deliberation over whether Biden would use his executive authority to forgive a portion of the federal student debt burden. It arrives ahead of congressional midterm elections and could give the Democrats a boost with some voters, but also threaten their standing with those who say the amount is not enough — or too much.



Biden has drawn the ire of activists and some student loan borrowers who were growing tired of promises of a decision that stretched over more than a year. Biden had previously expressed reluctance to grant forgiveness to people who attended elite universities, while moderate Democrats and Republicans derided the policy as fiscally irresponsible.
The decision to add additional forgiveness for Pell Grant recipients reflects the White House’s desire to limit debt relief to Americans most in need. Seven in 10 college graduates with federal loans also received a Pell Grant, and Pell recipients have on average an additional $4,500 more debt than other college graduates, according to the Institute for College Access & Success, an advocacy organization.
“It’s great to see the president take action to forgive the crushing debt burdens of borrowers from the most disadvantaged backgrounds,” said Lindsay Owens, executive director of the Groundwork Collaborative, a left-leaning think-tank.



The White House’s decision rejects the warnings of centrist Democratic economists — such as Larry Summers, the former Democratic treasury secretary — who have said it will increase inflation and add to the federal deficit. Republican lawmakers are also expected to blast the White House over the move, arguing it offers unnecessary subsidies to Americans who made bad decisions while doing nothing for those who did not go to college.
Biden allies feud over student loan cancellation
Previous estimates have found that canceling $10,000 in student debt per borrower could cost the federal government roughly $230 billion, but that number will be higher with the larger amount for Pell Grant recipients.
“Canceling student debt is expensive, inflationary, and unfair to those who paid their student loans and most likely illegal,” said Brian Riedl, a policy analyst at the Manhattan Institute, a center-right think-tank. “It does nothing to prevent universities from raising costs and students from borrowing more money in anticipation of future loan forgiveness

 

HawkeyeShawn

HR Heisman
Nov 9, 2001
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Wonder if this applies to students currently enrolled. For example, my son took out $5500 for his first year and another 5500 this year.
 
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binsfeldcyhawk2

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If people get mad about this, wait until they learn about the PPP and the nearly trillion dollars of forgiven loans for business owners with no income limit or use restriction!
You know…it’s not one or the other. Folks can be mad about both…I know I am.

 

TC Nole OX

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Mar 29, 2002
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I have no debt of any kind. I worked in restaurants to pay my way through college, with no loans. All of that said, I have zero problem with this. If anything, the forgiveness amount should be much larger.

Boomers and most Gen X were able to attend college for relative pennies thanks to significant state subsidies. That all changed in the early 90s and it needs to be reversed and corrected. Loan forgiveness is but one step.
 
Feb 9, 2013
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You know…it’s not one or the other. Folks can be mad about both…I know I am.

You strike me as one of those suckers who lives within his means and pays his bills. Loser!
 

binsfeldcyhawk2

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Th calculation for the $10k forgiveness was $300B….who knows how much the pell grant addition will cost. Crazy…
 

onlyTheObvious

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Jan 3, 2021
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We saved $50 a month for each of our kids from the day they were born. Sacrificed vacations and many extras to help pay for their college. We also wrote some big fricking checks along the way on top of what we saved. We forced our kids to save 1/2 of everything they earned growing up for college.

a banker in town proudly announced to anybody that would listen they were not going to help their kids one bit. He drives around town in an expensive sports car.

I guess he did it right.

everybody is a victim and no consequences for anything anymore.

too bad our home is about paid for. Free mortgage will no doubt be on the DNC platform soon.
 

HerkyOwnsCy

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If only I hadn't paid most of mine and what I still have was consolidated to private loans for the better interest rate.
 
Feb 9, 2013
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Any arbitrary cutoff is stupid imo. So if your household made 251k then nothing but if you made 250k then you get potentially 20k forgiven?

I'm not against student loan reform at all but this just isn't the best way to do it.
Well, the arbitrary cutoff is necessary for optics to show that forgiveness is not going to “wealthy” people. My point is $250k is way too high. If you are in that range you can afford to pay your debt.
 
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Hawkeye009

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Borrowers on the PPP knew the rules going in that their loan would be forgiven if certain criteria were met. I assume a vast majority of PPP borrowers would not have partaken in the program if they had to pay it all back.
It was free money for people with payroll. The fact that people wouldn't have taken the free money if they had to give it back isn't some retort to the fact that the government actually gave them hundreds of billions in free money.
 

West Duval Nole

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Dec 16, 2013
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I strongly question if this can be done by executive order.
Good question and that might be part of the play to get a Republican to take it to court so that they appear to be a bad guy to those that want it. Then use it as an election strategy to say vote Dem and we will get it passed through Congress.
 

Hawkeye009

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You know…it’s not one or the other. Folks can be mad about both…I know I am.


I'm thinking more about the politicians and followers who will rail on this program, but say nothing about the PPP.
 

Hawkeye009

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Fa7-7-GXoAEbYnu
 

HawkRCID

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I will say the 20k for PELL grant recipients specifically is a bit confusing….since they already got that aid…and I was under the impression that didn’t have to be paid back…
 

Rifler

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Well, the arbitrary cutoff is necessary for optics to show that forgiveness is not going to “wealthy” people. My point is $250k is way too high. If you are in that range you can afford to pay your debt.

Correct,.. This cap is about allowing a "reasonable" number of people to step up to the hog trough,.. Too few and there will be lots of complainers, too many and there will be lots of complainers,.. The $250K per household is about trying to find the political sweet spot.
 
Feb 9, 2013
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I will say the 20k for PELL grant recipients specifically is a bit confusing….since they already got that aid…and I was under the impression that didn’t have to be paid back…
I think that’s just an eligibility criteria for excess forgiveness.

You get double forgiveness if you have loans and were a Pell grant recipient.
 

Hawkeye009

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I will say the 20k for PELL grant recipients specifically is a bit confusing….since they already got that aid…and I was under the impression that didn’t have to be paid back…
Isn't that just to target more relief to people whose parents were low enough income that they got grants, but who also still had to take out loans? If so, that targets relief more to lower income students than just looking at current income levels.
 
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