Hundreds of thousands of Mississippians could benefit from student debt relief plans announced by the Biden administration, as many others now face the prospect of resuming loan repayment come next year.
Under plans announced by the U.S. Department of Education Wednesday, borrowers who make less than $125,000 a year will be eligible for up to $10,000 in loan forgiveness. Those with Pell Grants could see up to $20,000 forgiven.
The department also announced student loan payments will resume in January 2023; these had been on pause since 2020 under the Trump Administration.
The plan will not benefit those with private loans but could wipe away some debt for more than half of the nearly 439,000 Mississippians with federal student loans, according to an analysis by the Education Data Initiative. The average Mississippian with federal student loans owes about $37,000, one of the highest average debts in the country.
Details on how borrowers can get their loans canceled will be announced later this month. To qualify, a borrower must have taken out loans before July 2022 and made less than $125,000 in either 2020 or 2021, the Washington Post reported. Current students are eligible if their parents fall under the income cap.
For borrowers on income-driven repayment plans, the department also announced a proposal to halve monthly payments for those with undergraduate student loans. Under the proposed regulations, borrowers who also have graduate loans would pay an average weighted rate each month.
In a press release, U.S. Secretary of Education Miguel Cardona cast the plan as a way to restore faith among Americans that student loans can lead to opportunity rather than a cycle of debt.
“For too many people, student loan debt has hindered their ability to achieve their dreams—including buying a home, starting a business, or providing for their family. Getting an education should set us free; not strap us down,” he said.
The announcement was met with criticism Wednesday from the left and the right. On Twitter, Gov. Tate Reeves called the plan an unfair use of taxpayer dollars from working-class people who don’t have student loans.
Progressive groups said President Joe Biden’s plan doesn’t do enough to help borrowers who struggle to repay their loans. Many noted that Biden had campaigned on a more far-reaching pledge to forgive all undergraduate tuition-related federal student debt for borrowers making under $125,000 who graduated from public colleges and universities and private historically Black colleges and minority-serving institutions.
In an op-ed Wednesday, Derrick Johnson, the CEO of the NAACP, and Wisdom Cole, the NAACP’s national director of youth and college, called Biden’s plan “bad public policy and a devastating political mistake.” The NAACP had called for Biden to cancel up to $50,000 in student debt as a way to address the widening racial wealth gap among millennials.
Student debt disproportionately burdens borrowers in Black, brown and low-income communities, who have higher averages of student debt than white borrowers.
“Many privileged and predominantly White Americans, who inherited generational wealth, have had the fortune of not depending on expensive loans to begin with,” Johnson and Cole wrote. “They will likely benefit from $10,000 in cancellation to cover the remaining sum. But what about those in our society who did not inherit generational wealth?”
In Mississippi, Black borrowers take on higher amounts of undergraduate student debt than those of other races, according to data from a recent National Postsecondary Aid study. Black students in Mississippi borrowed an average of $10,800 in undergraduate student debt during the 2017-18 school year, while borrowers of other races took out an average of $7,400.
Black borrowers in Mississippi also took out more loans during the school year than the average Black borrower across the country, while borrowers of other races took on less debt than average.
While Biden’s announcement will benefit borrowers with past loans, it does little to address one of the primary reasons many Mississippians will go into debt to pay for college in the future – the rising cost of tuition.
Jennifer Rogers, the director of the Mississippi Office of Student Financial Aid, said she hopes Biden’s announcement will result in more legislative efforts to reduce the cost of college.
“The President’s executive action will certainly benefit past borrowers,” Rogers said. “I hope this action will also create momentum in the college affordability movement that results in additional bipartisan action to make college more affordable and therefore reduce the need for borrowing by current and future students.”
Since 2008, the cost of college has steadily increased in Mississippi – due in part to a dearth of state funding – but family income hasn’t kept pace. At the same time, the Legislature has cut the amount of state grant aid available to college students. A 2019 study from LendEDU found that the average student loan debt in Mississippi is rising at the ninth fastest rate in the country.
About 50% of students at public universities in Mississippi borrowed money to pay for college during the 2019-20 school year, according to federal data.
This story will be updated.
-- Article credit to Molly Minta of Mississippi Today --
