Biden Announces $10K Student Loan Debt Relief For Some Florida Borrowers

FLORIDA — Thousands of dollars in student loan debt will be wiped out for millions of students and parents in Florida and other states under a long-awaited federal plan announced by President Joe Biden Wednesday.

The federal government plans to forgive $10,000 in student loan debt for borrowers in Florida making $125,000 or less and families earning $250,000 a year or less will be formally announced by Biden at the White House at 2:15 p.m., Biden said in a statement posted to Twitter.

An additional $10,000 of forgiveness will go toward borrowers who received Pell Grants for college, which typically go to people from lower-income backgrounds.

The amount is the largest forgiveness of federal student loans per person in history, according to a report by The Hill.

“In keeping with my campaign promise, my administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023,” Biden said on Twitter.

Under the new plan, payments on federal undergraduate loans can be capped at 5 percent of a borrower’s monthly income.

Biden also directed officials to extend an existing pause on federal student loan payments until Dec. 31. The pause, implemented to provide significant financial relief to those affected by the coronavirus pandemic, went into effect in May 2020 and was extended several times under the Trump and Biden presidencies. It was scheduled to expire on Aug. 31.

As of 2021, nearly 166 million borrowers owe a collective $1.59 trillion in student loans, more than Americans owe on their auto loans or credit card balances, according to credit reporting agency Experian’s most recent State of Student Loan Debt report.

The average balance per borrower increased slightly in 2021 to $39,487, up nearly $700 from 2020, according to Experian.

Here’s a look at how student loan debt is affecting borrowers in Florida, according to the Education Data Initiative:

• 2,623,600 Florida residents have student loan debt.
• The average debt per borrower is $38,459.
• 12.2 percent of Florida residents owe student loan debt.
• 15.7 percent of the state’s indebted student loan borrowers owe less than $5,000.
• 20.7 percent owe $20,000 to $40,000.

An August survey conducted by the credit monitoring company ScoreSence revealed only 14 percent of U.S. borrowers with federal student loans on pause could afford the payments with no issues when the forbearance period ends. The survey also revealed that 42 percent of borrowers aren't sure how they will add loan payments back into their budget.

However, Florida students owe less than students in the majority of the county, according to a report released by the personal finance website, WalletHub, Wednesday on 2022’s States with the Most and Least Student Debt.

WalletHub compared the 50 states and the District of Columbia across 11 key metrics and found that Florida is No. 6 on the list of states with the least student debt.

The only states with less student debt are New Mexico, Washington, California, the District of Columbia and Utah.

The states with the most debt, according to WalletHub, are West Virginia, Pennsylvania, South Dakota, New Hampshire and Mississippi.

The Biden administration has so far taken a piecemeal approach to student loan forgiveness. In August, the administration canceled $3.9 billion in federal student debt for more than 200,000 borrowers who attended the for-profit ITT Technical Institute. In June, the Department of Education promised to erase $5.8 billion in debt related to Corinthian Colleges.

Through targeted cancellation for specific groups of borrowers, the Biden administration previously approved nearly $32 billion in student debt for 1.6 million borrowers, The Associated Press reported.

In recent months, Democrats have increasingly called for Biden to cancel a significant portion of student loan debt. Some Democrats, including Senate Majority Leader Chuck Schumer and Sen. Elizabeth Warren of Massachusetts, have called on the president to forgive $50,000 per borrower.

However, Biden's plan isn't without its detractors including U.S. Sen. Rick Scott, R-Florida.

Scott said it's unfair to those students who didn't incur debt, have already paid off or substantially paid off their debt or, like him, "paid their way through school."

"They went and worked full time. Or their parents worked full time, or their grandparents worked full time to pay their way through school so they had no debt," Scott said during an interview in April. "If they’re going to run up debt, they need to have a plan to pay it back.”