Estimated 1.3M in Michigan eligible for student debt relief

Washington — The White House said Tuesday that an estimated 1.3 million student borrowers in Michigan would see relief under the forgiveness plan that President Joe Biden announced last month.

That figure includes 849,300 Pell Grant borrowers that would be eligible for relief and an estimated 600,000 of Michiganians who could have their debt eliminated entirely, according to data from the U.S. Department of Education.

Notably, these figures are estimates that the agency calculated using statistical methods and Census Bureau data to approximate borrowers' income and their eligibility for cancellation. The department admitted it does not have income information for most of its borrowers.

Still, the data suggests the impact of the forgiveness plan could be felt widely across Michigan, with as many as 1 in 10 residents seeing some or all of their remaining student debt erased.

"College is supposed to help people up the economic ladder, but for far too many borrowers, and especially borrowers of color, student debt becomes an anchor that weighs them down," Under Secretary of Education James Kvaal told reporters on a call.

"At the Department of Education, we're working around the clock to implement the president's plan and get much needed relief to over 40 million low- and middle-income borrowers." 

Biden's plan calls for the government to forgive up to $10,000 in federal student loan debt for those with incomes below $125,000 a year, or households earning less than $250,000. Those who received Pell Grants to go to college could have an additional $10,000 in debt eliminated.

The proposal has been met by wide denunciation by Republican lawmakers and attorneys general, who have suggested that Biden's move is illegal and have indicated their intention to sue to block its implementation.  

U.S. Rep. John Moolenaar, R-Midland, charged that Biden's plan would take money from hardworking Michigan families and mostly benefit wealthier Americans "who chose to take on debt."

"Michigan residents who learned skilled trades and put those skills to work will now be picking up the tab for personal loans taken out by others,” Moolenaar said after Biden's plan was released last month.

"It is also completely unfair to the many Americans who worked hard and already paid back their loans. All of us will be paying the price for this Biden policy as it will increase inflation and raise the cost of goods and services.”

U.S. Rep. Tim Walberg, R-Tipton, also criticized the move.

"President Biden’s unilateral student loan bailout will further fuel the inflation crisis while doing nothing to address the soaring cost of higher education," said Walberg, who sits on the House Education and Labor Committee. "This is a politically motivated transfer of wealth that places the financial burden on the backs of the vast majority of Americans who do not have student loan debt.”

The Biden administration has defended the policy as sound and “appropriate” under a 2003 statute that grants the executive branch broad latitude to overhaul student loan programming.

The law gives the education secretary the authority to waive or modify any federal student aid provision in connection with a war or national emergency. This was the same authority cited by the administration to suspend payments and waive interest during the pandemic.

"The Secretary has clear authority to protect borrowers from financial harm resulting from the pandemic, and we're quite confident that he has the authority to carry it out," Kyaal said Tuesday.

Kyaal also defended the forgiveness plan, arguing that the system in place before the pandemic "wasn't working," citing how nearly 1 million borrowers defaulted every year, leading to wage garnishment and poor credit scores, while others ended up owing more than they borrowed to start with.

He also pushed back against critics saying the relief would benefit "overprivileged high-rollers," saying the department's analysis found 90% of  the debt relief would go to people making less than $75,000 a year.

"The impact will be so far reaching that 40% of all adults who ever attended college will owe less or nothing on their student loans," Kyaal said. 

The process for signing up for the forgiveness is still in the works. Officials said Tuesday that they plan to open the process for accepting applications in early October and then to begin processing them. 

"We will be providing additional information very soon," said Carmel Martin, White House deputy assistant to the president for economic mobility. "Our hope is to we'll be working hard to ensure that we can process those claims — if people apply — by the end of the year." 

Year's end is when the pandemic-related pause on student loan payments expires. 

Public service workers have until Oct. 31 to apply for student debt relief under a temporary waiver that's soon expiring. 

mburke@detroitnews.com