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Student debt forgiveness could benefit 40M borrowers across U.S.

State-by-state data released by President Joe Biden (L), and Education Secretary Miguel Cardona (R), shows about 40 million borrowers across all 50 states are expected to benefit from the administration's student loan forgiveness plan. Photo by Bonnie Cash/UPI
State-by-state data released by President Joe Biden (L), and Education Secretary Miguel Cardona (R), shows about 40 million borrowers across all 50 states are expected to benefit from the administration's student loan forgiveness plan. Photo by Bonnie Cash/UPI | License Photo

Sept. 20 (UPI) -- The Biden administration expects 40 million federal student loan borrowers to benefit under the president's student loan forgiveness initiative, according to a new state-by-state breakdown.

The Department of Education data, released Tuesday, shows the 40 million borrowers are spread across all 50 states and include "nearly 20 million borrowers who could see their entire remaining balance discharged," according to the White House fact sheet.

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"That's 20 million people who can start getting on with their lives," President Joe Biden said as he announced the plan last month. "All this means that people can finally start to crawl out from under that mountain of debt."

Based on the breakdown, California and Texas would see the largest number of borrowers benefit from the plan compared to any other state.

The student loan forgiveness initiative gives borrowers a break by providing up to $20,000 in debt relief to Pell Grant recipients and up to $10,000 to other borrowers. It has been praised by some as a good measure of relief -- and criticized by others who say it gives a break to higher-income Americans who can afford to repay their loans.

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Eligibility for student loan relief is restricted based on a borrower's income. To qualify, borrowers must have earned less than $125,000 in either 2020 or 2021.

About 90% of the expected relief will go to Americans earning less than $75,000 a year, according to the data.

"For too many, the cost of borrowing for college is a lifelong burden," the White House said.

"Since 1980, the total cost of both four-year public and four-year private college has nearly tripled, even after accounting for inflation. Federal support has not kept up," it added. "Pell Grants once covered nearly 80% of the cost of a four-year public college degree for students from working families, but now only cover a third."

Researchers at the University of Pennsylvania's Wharton School of Business say Biden's student loan cancellation program would cost more than $600 billion over the next 10 years.

Lawrence Summers and Jason Furman, prominent Democratic economists who served in prior administrations, have argued that forgiving too much debt runs the risk of worsening inflation, by increasing spending -- an issue that Democrats are already facing ahead of the midterm elections in November.

The Biden Administration says the student debt relief plan will help borrowers recover from the pandemic and should narrow the racial wealth gap.

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"Nearly 71% of Black undergraduate borrowers are Pell Grant recipients, and 65% of Latino undergraduate borrowers are Pell Grant recipients," according to the data.

The Department of Education plans to release more details in the coming weeks on what borrowers need to do to qualify for the forgiveness plan. The Department has advised borrowers to apply by Nov. 15 before restarting federal loan repayments in January.

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