TAMPA, Fla. (WFLA) — There are 2.6 million student borrowers in Florida. With the new Biden debt cancellation, how much will Floridians be saved?
The current level of student loan debt in the state of Florida is over $102 billion, according to data from the federal government. Nationally, Florida is home to roughly 6.4% of the total student debt of the United States. The U.S. has a total of $1.59 trillion in student loan debt, a higher amount than the costs of car loans in the country.
The Federal Reserve reports student debt levels rose by $19 billion from 2021 to 2022. Nationally, 5% was delinquent, or behind in payments by as much as nine months, in the second fiscal quarter for 2022.
President Joe Biden announced a sweeping plan to deliver thousands of dollars of student debt relief on Wednesday. Under the plan, Biden said student borrowers who received Pell Grants are eligible to receive between $10,000 to $20,000 in debt cancellation.
The Pell Grant, an education provision created in 1965 as the Basic Educational Opportunity Grant before being renamed in 1980, provides educational funds to low-income families with students at university and other secondary education colleges and institutions. The U.S. Department of Education describes the grants as funds for “need-based grant aid to eligible undergraduate students to help reduce financial barriers to postsecondary education.”
According to the USDOE, 7.25 million students received Pell Grant funds in 2020, a 3.6% increase from 2019. The department’s data report described the funding proposal for 2020’s Pell Grants as being made up of $30.1 billion in student aid. In the latest data from USDOE, for the 2017-2018 aid year, 351,645 students received Pell Grants.
While more recent data from the federal government wasn’t available online, data compiled by the site EducationData.org reported Florida had an average of 489,472 award recipients in the 2021 school year.
Biden’s debt relief plan for student borrowers would guarantee up to $20,000 for students who received Pell Grant funds, with the relief a debt cancellation. Separately, borrowers making less than $125,000 per year are also eligible for $10,000 in debt cancellation from their federal loans. These relief efforts do not include privately held loans.
Going off of the statistics reported by EducationData, Biden’s plan would clear out roughly $9.8 billion in debt for Florida student borrowers.
According to a release from the White House, detailing the relief plan, a separate goal to reform the U.S. higher education system is focused on “fixing existing loan repayment” requirements.
Without the debt cancellation, Biden’s plan to restructure the federal student loan programs would reform a factor that adds to repayment times and debt levels over the years of paying off student loans, the interest rates. To do so, the White House said unpaid monthly interest on loans would be covered under the federal income-driven repayment program, so that “no borrower’s loan balance will grow as long as they make their monthly payments.”
The Biden administration also plans to cut the amount borrowers pay every month from 10% of their discretionary income to 5%. Additionally, loans that still have a balance after 10 years of continuous payment will be forgiven, when the loan balances were originally $12,000 or less.
That provision is currently in effect for those paying continuously for 20 years, under current law and regulation. The final part of the student loan relief announcement was one last extension of the repayment pause, to halt repayment requirements for federal student loans through Dec. 31.