BOISE — Almost all Idahoans with federal student loans will be eligible for some student loan forgiveness under a Biden administration program rolling out this fall, according to data released Tuesday by the White House.
An Idaho Capital Sun analysis of federal loan data shows the forgiveness program would also wipe out federal student debt for more than 73,000 Idahoans — about one in three Idahoans who have federal loans — because they owe less than $10,000. $.
“College is supposed to help people climb the economic ladder, but for far too many borrowers — and especially borrowers of color — student debt becomes an anchor that weighs them down,” the deputy said. U.S. Department of Education Secretary James Kvaal during a press briefing on the newly released data.
There were about 217,000 student borrowers in Idaho in March, according to federal student loan data. The White House estimates that 201,400 people in Idaho will be eligible to have at least some of their federal loan debt forgiven.
This does not include private student loans or government guaranteed loans held by commercial lenders.
Idaho Governor Brad Little co-signed a letter to President Joe Biden this month opposing the program. The letter raised concerns that debt cancellation would encourage more borrowing and worsen tuition fee increases and headline inflation.
“For those who are not struggling with student loan debt right now, it can be hard to see just how crushing that debt can be,” Sen. Elizabeth Warren, D-Massachusetts, said during the briefing. “People are afraid of what it means for their future and ashamed of what it says about their past. Student debt is a burden they carry every day.
The program includes an additional layer of forgiveness for borrowers from low-income households. Those who received need-based federal Pell grants can have an additional $10,000 forgiven of their federal loans. The White House estimated that 144,900 Idahoans would be eligible for this.
More than 90% of student debt forgiveness will go to people earning less than $75,000 a year, Kvaal said.
Responding to criticism that the program is forcing taxpayers to foot the bill for people who have made poor financial decisions, Deputy Director of Economic Mobility Carmel Martin argued that reducing debt would strengthen the economy.
“They will be able to think about buying houses, starting businesses, being in a better financial position for retirement, which, you know, will benefit the economy as a whole,” she said. “…many Republicans and conservatives arguing (against student debt relief) oversaw the rise in deficits each year of the previous administration, adding $8 trillion in arrears for tax cuts and expenses during periods.”
Half of Idahoans with outstanding federal loans are under age 35, according to federal loan data. Tens of thousands of Idahoans have student debt in their 40s and beyond.
Idaho students who graduated in 2020 had an average of $24,983 in student loan debt, according to the Institute for College Access and Success. About 58% of all Idaho graduates that year took out loans to pay for their education, the higher education research and advocacy organization said.
However, this was not all federal student loan debt that could qualify for the forgiveness program.
The organization’s latest Student Debt Report indicates that 7% of Idaho college graduates in 2020 took out private loans to pay for their education. Their private student debt averaged $21,544, according to the report.
Idaho graduates had one of the lowest average student loans in the United States that year, according to the report.
The report recommended policy changes that could help ease the financial burden for students pursuing education beyond high school.
“Continued state investment and strong oversight, particularly to address education quality and persistent equity gaps, are key to making college more affordable and helping more students to graduate,” the report said.
Among the recommendations was a recommendation that state policymakers exempt canceled federal student loan debt from state income tax, something Idaho already does.