Washington, D.C. — Last week, the U.S. Department of Education released guidance and emailed student loan borrowers directly about a new round of debt relief planned for this fall. New analysis from the Center for American Progress provides fresh insight into this projected relief, including which borrowers are expected to benefit and how these policies will help address the nation’s student debt crisis.
Key findings from the analysis include:
- After accounting for the approximately 4.8 million borrowers who have already been granted student loan debt relief by the Biden-Harris administration, the new debt relief policies are expected to bring the total number of borrowers who receive full or partial cancellation to 32 million, or about 3 in 4 borrowers.
- Approximately 23 million borrowers who have seen their balance grow beyond their original principal will have some or all of that interest growth canceled under these new policies.
- Roughly 23 percent of borrowers expected to receive interest relief are Black—about double the share of Black American college attendees in the general population.
- These policies target borrowers from low-income backgrounds, as 68 percent and 76 percent of borrowers expected to receive relief under the two new interest waiver policies, respectively, received Pell Grants, compared with about 32 percent of all undergraduates.
- Of the people eligible for relief because their loans have been in repayment for longer than the minimum required term or because they attended programs that lost Title IV funding, 83 percent have experienced default—showing that these policies will offer remedy to those who have struggled the most with repayment.
- 83 percent of borrowers eligible for cancellation who attended programs that lost federal funding attended less than two years of undergraduate education. This is a borrower group known to have lower incomes and to face more financial hardship than other borrowers.
“For too long, millions of student loan borrowers who were entitled to relief were stuck in limbo because of the complexity and dysfunction of the repayment system. Others saw their balances balloon, even when they made payments,” said Sara Partridge, associate director of Higher Education Policy at CAP and co-author of the issue brief. “These new policies are a necessary step that will alleviate the burden of student loan debt and progressively target those borrowers who are known to struggle the most.”
Read the issue brief: “New Student Debt Relief Policies Fix Broken Promises and Benefit Borrowers Most in Need” by Sara Partridge, Madison Weiss, and Brendan Duke
For more information or to speak with an expert, contact Mishka Espey at [email protected].