The Biden administration has announced a new student loan debt forgiveness plan canceling up to $20,000 in debt for eligible borrowers, as well extending a pause on repayments for all borrowers until Dec. 31.
K-12 educators are among those who stand to benefit from the cancellation. Like many other professionals, teachers have taken out loans in order to afford the cost of their training. (The majority of teachers are trained in university-based programs that charge by the credit hour.)
The move falls short of some advocates’ hopes for an across-the-board cancellation of student loan debt and other changes to higher education affordability that better address racial inequities among borrowers, even as some Republicans said that the move would burden taxpayers, including some who haven’t gone to college. But the news has others calling it a needed first step.
“Today, we’re delivering targeted relief that will help ensure borrowers are not placed in a worse position financially because of the pandemic, and restore trust in a system that should be creating opportunity, not a debt trap,” said U.S. Secretary of Education Miguel Cardona in a statement.
Here’s how the new plan will work:
- Borrowers with an individual income of less than $125,000, or $250,000 for households, and who received Pell Grants, are eligible for up to $20,000 in federal loan debt cancellation.
- Borrowers with an individual income of less than $125,000, or $250,000 for households and who did not receive Pell Grants, are eligible for up to $10,000 in federal loan debt cancellation.
- Relief is capped at outstanding debt. So if you’re eligible for $20,000 in relief but your remaining balance is only $15,000, you get $15,000 in relief.
Nearly 8 million borrowers may be eligible to receive relief automatically, according to the U.S. Department of Education. For others, an application to provide income data to the department for eligibility will be made available in the coming weeks.
Teachers are among those who qualify. But how much will it help?
Kevin Frazelis, an English teacher at A. Philip Randolph Campus High School in New York, said he qualifies for the $10,000 relief. That means his remaining debt is essentially cleared away.
“I’m still in a bit of shock,” he said.
Hannah Kozik, a 1st grade teacher in the District of Columbia Public Schools, said she too will benefit from getting $10,000 shaved off her total debt. But that’ll still leave her with $80,000 to repay from graduate school.
A National Education Association report last year found that 53 percent of the pre-K–12 teachers and specialized instructional support personnel it surveyed took out student loans to fund their own education. And over half of educators who took a student loan and still had a balance by 2021 had an average debt amount of $58,700.
The report also found that younger educators are far more likely to have taken out student loans than older colleagues.
Both Frazelis and Kozik said they view the new federal forgiveness plan as a good first step with a lot more work ahead.
Frazelis said he knows educators who owe well into the six figures. And while Kozik said she’s confident in her ability to repay her loans, she knows the new plan will hardly make a dent among fellow educators with greater needs. That includes a teacher she knows who is a single mother and whose loans prevent her from being able to save toward her son’s education.
“It’s a drop in the bucket for her,” Kozik said of her friend. "[The new plan] is marginal compared to what we demand of teachers, and what we pay teachers.”
A financial aid program that can help teachers has been retooled
In addition to the newly announced relief, many teachers are eligible for the Public Service Loan Forgiveness program, which promises to forgive the federal loans of teachers and other public service workers if they make 120 on-time monthly payments toward their loan.
That program, though, was notorious for a confusing, complicated, and poorly communicated application process. It underwent changes last year to waive some requirements and allow previous payments that had been ruled ineligible to count as long as the borrower was working in public service.
As of May, more than 127,000 borrowers have qualified for forgiveness under these changes, according to the department. Those seeking to apply for this public service loan forgiveness under the current rules must do so by Oct. 31.
President Joe Biden also announced a proposed rule to change income-based repayment plans, which would:
- Require borrowers to pay no more than 5 percent of their discretionary income monthly on undergraduate loans instead of the current 10 percent.
- Forgiveloan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.
- Cover borrowers’ unpaid monthly interest so no borrower’s loan balance will grow as long as they make their monthly payments, even when that monthly payment is $0 because of low income.
Many of those who embraced the new relief also noted that it wouldn’t address all the inequities exacerbated by student loans.
“Now, the movement for higher education justice kicks into high gear,” said Melissa Byrne, a student debt cancellation activist, in statement. “We need Congress to send President Biden a bill for free public college and to cancel the outstanding student loan debt that smothers the future of far too many Americans.”
The NEA survey found that 56 percent of all Black educators have taken out student loans, compared to 44 percent of white educators. And Black educators took on significantly more debt than other racial and ethnic groups, with an average initial total of $68,300 among those who took out loans, compared to $54,300 for white educators and $56,400 for Latino educators.
The nonprofit The Education Trust found in a study last year that limiting debt cancellation would disproportionately exclude Black borrowers who are more likely to have balances over $50,000. It also found that Black borrowers are more likely to enroll in graduate school and take on high debt levels out of necessity, and are less likely to amass wealth, even when earning a higher income.
“It must be said that limiting the relief to these amounts represents a missed opportunity to do more to close the racial wealth gap, alleviate default rates, and prevent millions more borrowers from being burdened with decades-long debt payments that they are unlikely to ever pay off,” said Denise Forte, the interim CEO of the Education Trust.
“Canceling at least $50,000 in debt across the board would have amplified the positive effects of this decision and created pathways to financial stability for so many millions more—including Black borrowers who hold the highest amount of student loan debt and are most impacted by the racial wealth gap.”