WASHINGTON, D.C., AUGUST 24, 2022 — On Wednesday, the Biden administration announced that it would cancel $10,000 in student loan debt for borrowers making less than $125,000 annually or families making less than $250,000 annually. Additionally, borrowers who received Pell grants in college will receive an extra $10,000 — totaling to $20,000 in forgiveness. At the same time, the administration announced that it would again extend the pause on payments and interest accrual for federally-held student loans through the end of the year, until Dec. 31, 2022.
NASFAA President Justin Draeger issued the following statement:
On Loan Forgiveness
Today’s announcement should provide relief to millions of low- and middle-income student loan borrowers, with a particular emphasis on those who struggled most to afford higher education. Whether it does will largely depend on how well this can be implemented by the U.S. Department of Education. As with all federal student aid benefits, we urge the Department to carefully consider how this relief can be implemented as easily as possible, while still ensuring commonsense safeguards to ensure the right people get the right benefits.
We note that student loan relief without proposals for systemic reform is incomplete. Loan forgiveness today will not help new borrowers who are enrolling tomorrow. Students and parents need meaningful changes to the student loan system, and we are encouraged that the administration is proposing steps in that direction. NASFAA has also provided a set of recommendations that we hope the Biden administration and Congress will seriously consider.
One of the most urgent ways we can decrease reliance on student loans is to dramatically increase investments in the federal Pell Grant program. If even a fraction of the amount being spent on debt forgiveness were spent on upfront grants like Pell, many low- and middle-income students would borrow much less.
On the Payment Pause Extension
With just seven days until payments were set to resume, the timing of this announcement creates counseling challenges for financial aid offices, who do not have the information they need to adequately advise students in a timely way.
Of course, communication leading up to the resumption of payments in January 2023 will be key for all borrowers. We again call on the Department of Education to develop and roll out a smooth, efficient on-ramp to repayment. After more than two years without student loan payments, transitioning millions of borrowers back into repayment cannot happen at the drop of a hat. We look forward to exploring ongoing solutions with our federal partners in the weeks ahead.
The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents more than 32,000 financial aid professionals at approximately 3,000 colleges, universities, and career schools across the country. NASFAA member institutions serve nine out of every 10 undergraduates in the U.S. Based in Washington, DC, NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators.