Pa. students could get $24B debt relief under Biden plan

Pennsylvanians with federal student loans could collectively see about $24 billion in benefits under the Biden administration’s debt relief plan, according to estimates released Wednesday by a state budget agency.

The plan, announced last week by Mr. Biden, includes forgiving up to $10,000 in debt for borrowers earning below an income cap — set at $125,000 per year for individuals, or $250,000 for households — with Pell Grant recipients getting an extra $10,000 forgiven. Monthly payments are now capped for undergraduate borrowers at 5% of their discretionary income.

A pause on student loan payments also was extended for a seventh and final time through December.

Nearly 90% of the estimated $23.7 billion in benefits for Pennsylvanians will come from the plan’s forgiveness element, according to the Wednesday report from the Independent Fiscal Office, which relied in part on analysis from the Penn Wharton Budget Model.

Three-quarters of the plan’s total benefits will go to households earning less than $82,400, assuming that the state’s distribution of federal loans is similar to that of the nation as a whole. Pennsylvania residents who earn between $50,795 and $ 82,400 are the income group set to receive the largest share of benefits, at 36%.

There are 1.96 million Pennsylvanians who have outstanding student loans, according to the U.S. Department of Education. They collectively owe about $69.2 billion, the sixth-largest amount by state, with an average balance of $35,251.

Mr. Biden’s debt relief plan fulfilled a major promise made during his campaign for president, and was well received by his fellow Democrats. Some activists, as well as students with higher debt loads, have pushed for more debt to be forgiven and called the plan a starting point

Republicans have widely panned the plan, with some calling it a “scheme” and “government handout.”

A poll released Wednesday by Quinnipiac University found 53% of Americans approved of the debt relief plan.

The parties seemed to have an equal but opposite reaction to the plan, with 88% of Democrats approving and 81% of Republicans disapproving, according to the poll.