The Biden administration plan includes $10,000 of loan forgiveness for borrowers earning less than $125,000 a year ($250,000 for married couples) and $20,000 for Pell Grant recipients, a final extension of the student loan repayment pause, and a rule change to create a more progressive income-driven repayment plan.
Community colleges serve a vital role as affordable, open-access institutions, serving a large percentage of students who are economically marginalized, first-generation, and racially minoritized students. Ensuring that college is accessible and a stepping-stone to greater social economic mobility for community college students is essential and this plan can play an important role in reaching that goal.
“The administration’s equity-centered approach to prioritizing debt forgiveness for millions of borrowers who need it is significant and a cause for hope,” notes Dr. Karen A. Stout, president and CEO of Achieving the Dream. “This is an important step in responding to the financial burdens that the cost of attending college places on too many of our students.”
More than half of all borrowers owe less than $20,000, Stout notes. For these people, their debt may now be cut in half or eliminated entirely. For the many learners at community colleges who have received Pell Grants, who come from poverty-impacted backgrounds, or who are supporting families while they pay off their debt, this could be life-changing. And it’s a benefit that will affect not just the borrower, but their family and their community at large.
“I am hopeful that the debt forgiveness sparks a return to postsecondary education for the millions of borrowers with some college, but no credential,” Dr. Stout said. “Lifting the burden of debt may be just what these learners need to return to college to gain a credential that transforms their lives.”
Going forward, the new proposed rule for income-driven repayment that would require borrowers to pay no more than 5 percent of their discretionary income and cut the time to loan forgiveness in half for borrowers with less than $12,000 in debt should be a significant benefit for community college students.
Dr. Stout said that there is still work to do to make sure that more students have access to higher education and the supports to complete a credential. “This is a historic and significant step in advancing one part of the two-pronged strategy that will be successful with our students. We need to ensure that all of our community college students can afford college and complete their credentials without being saddled with significant debt.”