DES MOINES — More than 400,000 Iowa borrowers are expected to see their student loan debt reduced or erased under President Joe Biden’s debt forgiveness plan, according to estimates from the White House released Tuesday.
According to a White House fact sheet, 408,700 Iowa borrowers will see some federal student loan debt forgiven. Of those borrowers, 248,900 are Pell Grant recipients and are eligible for up to $20,000 in debt forgiveness. Other borrowers are eligible for up to $10,000 in debt forgiveness.
Biden announced the debt forgiveness plan in August, announcing borrowers making less than $125,000 a year, or less than $250,000 for married couples, would be eligible for up to $10,000 in loan forgiveness, or $20,000 for Pell Grant recipients. The administration expects that more than 40 million borrowers nationwide are eligible for relief under the plan.
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The numbers in Iowa would represent 95% of the state’s 429,200 borrowers, according to March data from the federal Department of Education. Iowans owe a total of $13.3 billion in student debt.
The average amount owed by each Iowa borrower is close to $31,000.
Iowa politicians split on forgiveness
White House officials celebrated the plan in a call with reporters on Tuesday, saying the plan would provide upward mobility for millions of Americans.
“The analysis we are releasing today tells us that President Biden's debt relief plan will touch working families in every corner of the country,” U.S. Under Secretary of Education James Kvaal said. “In red states and blue states and everywhere in between states.”
Nearly 20 million borrowers are expected to see their debt completely erased, Kvaal said.
Iowa Democrats have given cautious support to the proposal, but stress that a more permanent fix for education costs is needed. Democratic U.S. Senate candidate Mike Franken called the move a “welcome first step” in an August tweet, but he said more meaningful legislation is needed and called for investments in job training programs.
Republicans have derided the move as a bailout that will transfer the debt of borrowers to other Americans who chose not to take out loans or already paid theirs off.
Gov. Kim Reynolds signed onto a letter with 21 other Republican governors this month calling on Biden to withdraw the plan and saying it puts the burden on lower-income Americans.
“Only 16-17 percent of Americans have federal student loan debt, and yet, your plan will require their debts be redistributed and paid by the vast majority of taxpayers,” the letter says. “Shifting the burden of debt from the wealthy to working Americans has a regressive impact that harms lower income families.”
The White House has stressed that income eligibility will be capped at $125,000, and it estimates 90% of recipients of relief make less than $75,000.
Several organizations are setting up to challenge the forgiveness plan in court, according to Axios.
Applications open soon
The Department of Education is expected to open an application for borrowers to apply for debt forgiveness in early October, according to U.S. Secretary of Education Miguel Cardona. Borrowers should then expect to see their loan amounts drop within the next four to six weeks.
Iowa borrowers can sign up for updates at the Department of Education website.