How Biden’s Student Loan Cancellation Will Affect Pennsylvanians

On Wednesday, President Biden announced a plan to forgive up to $20,000 in federal student loan debt. Everyone earning less than $125,000 per year will qualify for $10,000 in loan cancellation, while Pell Grant recipients will qualify for $20,000 in forgiveness.

The $10,000 forgiveness is estimated to wipe out $15.6 billion in debts currently held by Pennsylvanians. The plan also makes several changes in the income-based repayment structure, capping the monthly payment at 5% of a borrower’s monthly discretionary income – half the rate borrowers paid under the old plan.

On average, about one in six Pennsylvanians (16.8%) have federal student loans, the eighth highest percentage in the US. Pennsylvania ranks sixth in the United States for the total amount of student debt owed. The average balance of those loans is roughly $36,000.

On a ten-year repayment schedule, allowing for some variation in interest rates, that’s a payment of roughly $400 every month.

For the average working class family, that’s a lot of money, and forgiveness of the debt couldn’t come at a more welcome time. According to the Federal Reserve, 40% of Americans say they cannot afford to cover even a single $400 emergency expense, and that percentage has been climbing steadily in recent years. With so many Pennsylvania families in such precarious positions financially, even those who do not see their entire balances forgiven will still experience significant relief.

In the coming days and weeks, as this plan is debated, attacked, defended, and so on, one important point will almost certainly be overlooked: The Biden Administration is getting things done. After four years that brought us only one significant piece of legislation that resulted in a tax cut that went almost entirely to a wealthy class that never needed it, Biden’s team has racked up wins on infrastructure, stimulus, pandemic aid, deficit reduction, gun reform, and several other new laws. And they managed to take out the leader of Al-Qaeda in the process.

Not every piece of legislation is universally popular, and many of these laws came as a result of compromise that ruffled feathers on both sides of the aisle, but most would agree that Biden has been able to accomplish much more than anyone predicted would be possible.

While media entities all over America are rushing to publish stories about the imperfections in this plan and about the fact that no one got everything they wanted, the lives of American working families got a little easier yesterday. And as former president Barack Obama liked to say, “Better is good.”