CHARLESTON, W.Va. — More than 200,000 West Virginians could see the relief on student loans as part of a forgiveness plan announced by President Joe Biden on Wednesday.
Kelly Allen, the Executive Director at the West Virginia Center on Budget and Policy discussed the impact of the plan on West Virginia during an appearance on Thursday’s MetroNews ‘Talkline.’ She said about 220,000 hold student loan debt and one-third owe less than $10,000 total and could see their debts completely forgiven.
She said young people’s lives have been straddled with debt and this could benefit the local economies. Allen stated people with student loan debt are twice as likely to leave rural areas.
“This is something that is having a significant impact on people’s abilities to make a permanent home in their communities, to have families, to even stay in West Virginia,” Allen said.
Biden’s plan calls for erasing $10,000 in federal student loan debt for those with incomes below $125,000 a year, or households that earn less than $250,000. Those students who received the Pell Grants to attend college may see up to $20,000 in debt forgiven.
According to the Associated Press, the cancellation applies to federal student loans used to attend undergraduate and graduate school, along with Parent Plus loans. Current college students qualify if their loans were issued before July 1. For dependent students, their parents’ household income must be below $250,000.
Biden’s plan also proposes a rule to create a new income-driven repayment plan that will substantially reduce further monthly payments for lower and middle-income borrowers. According to the plan, the rule would cover the borrower’s unpaid monthly interest as long as they make payments.
Allen agrees with the plan and the rule on monthly interest.
“The average borrower takes 20 years to repay their loan on the very same day. If you map out the average interest rate, which is 6% in average debt, that’s $26,000 in interest per borrower,” she said.
The rule to create the income-driven repayment plan also would forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.
How many West Virginians will benefit from the student loan forgiveness? @kellakelWV, Executive Director of the @WVCBP, provides her insight to @HoppyKercheval. WATCH: https://t.co/yCFQ3nDJuy pic.twitter.com/rFf7vH50sG
— MetroNews (@WVMetroNews) August 25, 2022
An estimated 43 million borrowers in the United States will be eligible for some debt forgiveness under this plan. An estimated 20 million could get their debt erased entirely.
Officials with the Biden administration expect applications for the plan to be available before the end of the year.
Opponents of the plan argue that its unfair to those who have already paid their debt off and would create an extra burden for taxpayers.
“I do think the economic benefits of this are greater than the concerns that I have. I think overall it’s good for our economy,” Allen added.