New Data Undermines Student-Debt Relief Critics Who Say It'll Only Help the Rich

New Data Undermines Student-Debt Relief Critics Who Say It’ll Only Help the Rich

  • New data from the Department of Education suggests that Biden’s student debt relief would benefit the lowest incomes the most.
  • He said 81% of all applications received were from the bottom 80% of congressional districts by average income.
  • Republicans have often argued that broad relief would go to the highest earners.

You’ve probably heard this argument before: the student loan forgiveness is regressive and benefits the highest incomes.

Well, new data could undermine that idea.

The Department of Education released new data Friday, providing the most detailed breakdown yet on how many student loan borrowers would benefit from President Joe Biden’s plan to cancel up to $20,000 in student debt for federal borrowers. The department said last month that before the aid application form was closed due to Conservative-backed lawsuits, 26 million borrowers had applied or were automatically deemed eligible, and 16 million of them were fully approved.

Now the department has released data by congressional district — and it gave a big hint that Biden’s $125,000 income cap on relief was working as intended, ensuring it would benefit borrowers who have the money. Not needed anymore. According to the department, 81% of all applications came from the bottom 80% of districts based on average income, and the bottom 80% of those districts have more borrowers eligible for relief than the top 20%.

Moreover, according to a Politico analysis, 98% of requests came from ZIP codes with per capita income below $75,000, and more than half of requests came from areas with per capita income below $35,000. Still, as Politico noted, it’s impossible to get accurate data on the incomes of individual borrowers who applied because the department didn’t collect all of that information in the process. He used department data, as well as the US Census Bureau, to make these estimates.

But it’s safe to say that Biden’s relief would work as intended, targeting it at the lowest incomes. Republican lawmakers and some experts have critical relief for those who don’t need it – for example, Republicans on the House Education Committee writing on Twitter last year that “widespread loan cancellation is funneling money to borrowers who NEED it LEAST”.

Biden himself feared even early in his presidency that student debt relief would benefit those who earned high incomes and attended Ivy League schools, and his income cap was intended to balance that concern. Yet Democratic lawyers and lawmakers were pushing him to make the relief more expansive without any thresholds. Minnesota Representative Ilhan Omar urged Biden in a letter ahead of his announcement that he should “follow the sound advice of experts and scholars against including an income cap or other means test.”

Now all eyes are on the Supreme Court to see if those borrowers will eventually get relief. On February 28, the Court will deliver hear oral arguments on the two lawsuits backed by the Conservatives who suspended the implementation of Biden’s plan, after a series of amicus briefs were filed with the Court either urging him to fell relief, or defend he.

These memoirs included one of 128 House Republicans expressing opposition to Biden’s plan. Along with new data from the Department of Education, an analysis by the advocacy group Student Borrower Protection Center found that nearly 12 million borrowers in all districts these legislators would benefit from the relief.

Yet Republicans continued to emphasize their view that debt relief is illegal, unfair and costly, with a group of senators reintroduce a bill on Thursday to block relief and resume student loan payments.

“President Biden is unfairly shifting the burden from those who voluntarily took out loans to those who did not,” GOP Sen. Bill Cassidy said in a statement. “There’s no support for the man who didn’t go to college but is paying for a work truck or the woman who has responsibly paid off her student loans but is struggling with her mortgage.”

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