President Joe Biden has asked the Secretary of Education to look into his legal authority to forgive certain amounts of student loan debt. But while the country waits on that review, new analysis shows the impact that forgiving some of that debt could have.
A number of proposals have been floated, but $10,000 a person is an amount Biden has indicated he would consider forgiving.
Federal loans owned by the federal government account for $1.3 trillion, or 76% of student loan debt.
The new analysis from Student Loan Hero finds that 34% of borrowers could have all of their direct federal student loans — the most popular type of student loan — erased under the plan Biden has discussed. Another 20% of borrowers would have their balances cut by at least half.
Student loan counselors to benefits for everyone under the proposed plan.
“Basically, when you forgive student debt for a large amount of Americans, you're helping to stimulate their personal finances and in turn stimulating at least local economies and hopefully nationally as well,” said Andrew Pentis with Student Loan Hero.
Biden has said he prefers not to take executive action and wants to work with Congress to cancel student loan debt instead. He’s also said the government should not forgive debt for people who went to Ivy League Schools.
“At this point, it's looking still like it's a divisive issue at a time where the president wants to unite the country, so I don't see him rushing to do it,” Pentis said. “Another reason why this might be delayed is that the ongoing federal student loan repayment freeze is due to last through September.”
The Department of Education already has more targeted debt cancelation policies in place for defrauded students and disabled veterans.