Biden Cancels $238 Million More in Debt, Teases More on the Way
As Biden cancels $238 million more in debt, experts wonder when he'll take bigger action on debt.
President Joe Biden is making moves to fulfill a campaign promise to have student debt forgiven.
While the administration continues to explore options on canceling student debt on a larger scale, from income limits or capping forgiveness to well below $50,000 per borrower, another loan discharge was offered totaling $238 million to borrowers who attended Marinello Schools of Beauty, a now-defunct for-profit cosmetology chain. This tracks with Biden’s past debt forgiveness actions, in which he has largely focused on people who were frauded into taking student loans out by for-profit colleges or those who might not be able to work.
Adding in the Marinello loan discharges, the Biden administration has offered relief totaling close to $2.1 billion on borrower defense claims for over 130,000 borrowers. The targeted debt relief is done under the borrower defense to repayment provision, which allows students to have all debts erased if it’s proven the school defrauded them.
While the defraud forgiveness is welcome, 45 million Americans still currently carry the burden of student loan debt totaling close to $1.7 trillion. Most borrowers hold something between $25,000 and $50,000 of debt. And helping relieve some of that debt for Americans is a campaign promise the Biden Administration made while running for office, since Biden took office in 2021, little action has been made.
Just weeks ago, Biden confirmed that he would have an announcement on the cancellation of student debt within the coming weeks — and confirmed that whatever debt would be canceled, it would be well below the $50,000 mark. More likely than not, Biden will use executive action to eliminate around $10,000 in debt for student loans. And it appears that it might not be for everyone — the potential of an income cap to determine eligibility has been thrown around by people like Jen Psaki, Biden’s press secretary. Now, that plan seems to be taking shape.
As plans continue to formulate regarding student loan forgiveness, President Biden is considering an income cap of less than $125,000 a year, according to the White House.
“The president talked back on the campaign about…looking at steps to help people making less than $125,000 a year, so that is the frame through which he’s making considerations at this point,” White House Press Secretary Jen Psaki told reporters on Tuesday.
Experts at the Brookings Institute released a report in February 2021 that highlighted the importance of focusing on wealth, not income, if the government were to consider income caps for student loan cancellation eligibility.
“If wages and wealth were growing at similar rates, the rise in the cost of education might not be a problem. But the rise in the cost of tuition has outpaced the rise in wages and overall inflation… the problem is especially pertinent in Black households, for whom a lack of generational wealth risks making student debt a long-term financial burden,” Brookings Institute wrote.