Parents and graduate students could reportedly be eligible for student-loan forgiveness after all
- A Politico report found the Education Department is ready to cancel student debt once Biden signs.
- The department predicts that graduate-school debt and parent PLUS loans would be included.
A new report offered some much-needed clarity on how President Joe Biden's Education Department is preparing to implement broad student-loan forgiveness.
On Thursday, Politico released a report — based on internal memos it obtained — outlining how the department is planning to carry out broad debt relief once the White House signs off. A significant element of the report was that within months after Biden makes an announcement of relief, suggested to be $10,000 for borrowers making under $150,000 a year, the department is prepared to cancel student debt automatically for millions of borrowers with income information readily available. Other borrowers would be able to submit an online form for relief self-certifying their incomes.
Aside from the timeline, the scope of relief the department is contemplating is larger than anticipated. According to the report, the department said that all types of federal loans should be eligible for loan forgiveness. This includes federal loans that were later transferred to private companies like those in the Federal Family Education Loan program, along with graduate and parent PLUS loans, which allow a graduate student or parent to borrow loans up to the full cost of attendance for a program.
As Insider previously reported, it has been unclear whether borrowers with parent PLUS loans would be included in any broad relief. PLUS loans have the highest interest rate of all federal loans, now at 7.54%, and nearly 4 million parents in the US have taken on that debt to give their kids a higher education. But given that borrowing PLUS loans are largely unrestricted, many parents can end up with a debt burden long after their kids graduated.
A recent report from The Century Foundation found that the average PLUS-loan borrower still has 55% of the initial balance remaining after ten years of repayment — and 38% after 20 years — which could mean that for some, they spend more time paying off those loans than they did raising their kids.
Prior to the Politico report, many parents told Insider they felt left out of the student-loan forgiveness conversation. Adria Mansfield, for example, now has $187,000 in student debt she took out for two of her children, and she said she feels like she's "being punished for taking out loans so our children will be successful."
"Half of our children would not be able to go to school and become successful if it weren't for the parents," she said. "And I just don't feel like it's fair that we're overlooked."
While the memo might suggest good news is on the horizon for those borrowers, the plans are not finalized because the White House still has to sign off. But borrowers can expect an announcement from Biden before August 31 — a timeline the president himself said he would stick to, which is when student-loan payments are set to resume.