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Student loan forgiveness impact will vary from borrower to borrower

President Biden is expected to make an announcement about his plans for federal student loan cancellation this week.
Posted at 10:22 PM, Aug 23, 2022

Update: President Joe Biden announced Wednesday that his administration will forgive up to $20,000 worth of student loan debt for borrowers who received Pell Grants.

MILWAUKEE — Recent UW-Milwaukee graduate Assante Pressley is feeling good after landing a job right out of college, but upcoming student loan payments are lingering in the back of his mind.

"I guess I am worried about how having to make that extra payment a month will inhibit me from doing other things or investing in other things financially," Pressley said.

Like many people, Pressley took out student loans to help pay for college. But, unlike others before him, he graduated at a time when federal student loan payments were frozen due to the pandemic.

Now, after several extensions from the federal government, the pandemic-era freeze is scheduled to end Aug. 31.

"I'm going to have to definitely adjust how I've been budgeting my money and spending my money for sure," Pressley said about the upcoming deadline.

But, he's hoping his loan will be brought down before he even has to start paying it off.

President Biden is expected to announce that he will cancel $10,000 of federal student loans per borrower making less than $125,000 annually.

For Pressley, it would cancel nearly half of the debt he graduated with. He said that would have a big impact for his life.

However, $10,000 won't impact everyone who qualifies equally.

Gabriel Velez, the Faculty Director of the Black and Latino/a Ecosystem and Support Transition (BLEST) Hub at Marquette, said recent grads will benefit the most from the partial debt cancellation.

"$10,000 is actually probably going to prevent them from carrying a much heavier debt load down the road," Velez said.

But for people who graduated several years ago, with interest building up, $10,000 may not have the same impact, especially in communities of color.

A report from Brookings Institution found that four years after graduation, Black college graduates owe an average of nearly $53,000 in student debt. The average white college graduate owes about $28,000 four years after graduation.

This means on average Black grads will see just 19% of their student debt forgiven while white grads will see 36% forgiven.

"I think folks are saying, 'hey when we look at these discrepancies, we need to be giving more particularly if we're taking this lens of equity,'" Velez said.

However, he did say the $10,000 cancellation is an important first step in a larger conversation about student debt and the disparate impacts it can have.

And while Pressley is happy to possibly have $10,000 of his loans canceled, he did think a bit more would go away.

"I hope that Biden forgives at least $10,000, even though before I think he might have promised a little bit more. It would obviously be ideal if he could forgive a little, or a lot, more," Pressley said.

President Biden is expected to make an announcement about his plans for federal student loan cancellation this week.

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