By Charlene Crowell, Center for Responsible Lending
As consumers struggle to cope with mounting debt, a new economic report from the Federal Reserve Bank of New York includes an unprecedented glimmer of hope. Although debt for mortgages, credit cards, auto loans and more increased by billions of dollars in the second quarter of 2024, student loan debt decreased by $10 billion.
According to the New York Fed, borrowers ages 40-49 and ages 18-29 benefitted the most from the reduction in student loan debt.
In a separate and recent independent finding, 57% of Black Americans hold more than $25,000 in student loan debt compared to 47% of Americans overall, according to The Motley Fool’s analysis of student debt by geography, age and race. Black women have an average of $41,466 in undergraduate student loan debt one year after graduation, more than any other group and $10,000 more than men.
This same analysis found that Washington, D.C., residents carried the highest average federal student loan debt balance, with $54,146 outstanding per borrower. Americans holding high levels of student debt lived in many of the nation’s most populous states — including California, Texas and Florida.
If approved as drafted, the new rules would benefit over 30 million borrowers, including those who have already been approved for debt cancellation over the past three years.
The draft rules would benefit borrowers with either partial or full forgiveness in the following categories:
- Borrowers owing more now than at repayment start, benefiting nearly 23 million, mostly Pell Grant recipients
- Borrowers in repayment for decades, starting on or before July 1, 2000
- Borrowers eligible for forgiveness but not yet applied, including those not enrolled in IDR plans
- Borrowers from low-value programs or institutions failing accountability standards
Most importantly, if the rules become approved as drafted, no related application or actions would be required from eligible borrowers — so long as they did not opt out of the relief by the Aug. 30 deadline.
“The Center for American Progress estimates the interest waiver provisions would deliver relief to roughly 6 million Black borrowers, or 23 percent of the estimated number of borrowers receiving relief, as well as 4 million Hispanic or Latino borrowers (16 percent) and 13.5 million white borrowers (53 percent),” stated the Center for American Progress in an Aug. 7 web article.
These pending regulations would further expand the $168.5 billion in financial relief that the Biden administration has already provided to borrowers:
- $69.2 billion for 946,000 borrowers via Public Service Loan Forgiveness (PSLF) fixes
- $51 billion for over 1 million borrowers with IDR payment count adjustments
- $28.7 billion for 1.6 million borrowers affected by school issues or court settlements
- $14.1 billion for 548,000 borrowers with total and permanent disabilities
- $5.5 billion for 414,000 borrowers through the SAVE Plan
More information for borrowers about this debt relief is available at StudentAid.gov/debt-relief.
