More than 350,000 Arkansans can receive at least some student loan debt forgiveness under a plan announced last month by President Joe Biden, according to state-by-state data released by the U.S. Department of Education and White House on Tuesday.
On the same day as the update, U.S. Sen. Tom Cotton, R-Ark., announced proposed legislation that would require colleges to become guarantors of up to 50% of future federal student loans and fine colleges 25% of the value of future defaulted loans.
Cotton is among the critics of Biden’s plan for student-loan forgiveness, which the president announced Aug. 24.
According to federal government estimates released Tuesday, 365,600 Arkansans would be eligible for up to $10,000 in relief, while 269,000 would be eligible for up to $20,000 in relief because they were Pell Grant recipients.
Pell Grants are typically awarded by the U.S. Department of Education to undergraduates with exceptional financial needs and which usually doesn’t need to be repaid. Individuals who earn less than $125,000 annually are eligible, and, nationwide, nearly 90% of relief funds will go to those earning less than $75,000 per year.
That 365,600 figure “looks reasonable,” said Tony Williams, director of the Arkansas Student Loan Authority, a division of the Arkansas Department of Commerce. “It’s hard to say exactly what is accurate, but that number looks good.”
Williams estimates 125,000 to 130,000 people in Arkansas have $10,000 or less in student debt, so they would have all of their student loan debt wiped out under the Biden plan.
Nationally, more than 43 million people have federal student loan debt in the U.S., with the average debt roughly $37,000 per borrower, according to the Education Data Initiative, a group that provides research and resources on higher education in the United States. The outstanding federal loan balance is about $1.6 trillion in the U.S.
“Overall, there’s over $13 billion in student debt in Arkansas,” with borrowers carrying an average of $33,000 in student loan debt, Williams said last month. “Students borrow about $600 million in federal loans in Arkansas annually.”
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For the 3,845 graduates of the University of Arkansas, Fayetteville’s class of 2021, 1,750 students, or 46%, used federal loans, with an average borrowed amount of $20,961, according to the university. UA is by far the state’s largest school, with estimated fall enrollment this year of nearly 31,000.
Since Biden announced his plan last month, “we’ve been receiving a higher volume of calls than normal asking about loan forgiveness, but we have limited information we can share,” Williams said. “We have a pretty good understanding of what the plan will entail, but we don’t know all the details, so we’re asking people to be patient.”
The U.S. Department of Education said Tuesday it will release “in the coming weeks” additional details on how individuals across the country can benefit from the Administration’s student debt relief plan, pointing to a website — StudentAid.gov/debtrelief — that would have more information.
As many as 8 million borrowers may be eligible to receive relief automatically because relevant income data is already available to the U.S. Department of Education.
Others will have to apply, and the application page should be online early next month, according to the U.S. Department of Education. To be notified when the application is open, the federal agency asked people to sign up online at https://www.ed.gov/subscriptions.
Once a borrower completes the application, they can expect relief within four-six weeks, and borrowers are encouraged to apply by Nov. 15 in order to receive relief before the current payment pause expires at the end of this year, according to the U.S. Department of Education. However, the U.S. Department of Education said it will continue to process applications as they are received, even after the pause expires on Dec. 31.
Borrowers who have elected to continue making…
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