Maine Center for Economic Policy (MECEP) celebrates President Biden’s plan to forgive federal student loans — up to $20,000 for people who went to college on Pell grants and $10,000 for those who did not — and to ensure this assistance goes to people who need it most by limiting debt cancellation to people with income under $125,000 or households with income under $250,000.
Writing off this student debt:
- Helps roughly 177,000 borrowers in Maine (95 percent of borrowers)
- Ensures one in three Maine borrowers can afford necessities like food, rent, and clothes
- Erases up to half the debt of up to 30,000 older Mainers — in Maine, student loan borrowers over the age of 50 owe the most debt on average — easing financial pressures as they age into retirement
- Defends against consequences of defaulting on a student loan that include wage seizures, poor credit scores, and debt collection proceedings — one in five Mainers with student loan debt has had their wages or income tax refund garnished or their social security check taken away to pay for their student loans
“Student debt prevents Mainers from buying homes and cars, getting jobs, and starting families,” said Jody Harris, MECEP Vice President of Operations and Finance. “Federal action to forgive student loans particularly benefits Mainers, who hold more student debt than the average American, and would have outsized positive impacts for working Mainers, Black families, women, and people with low income.”
MECEP also applauds the extension of the COVID-19 emergency relief payment pause through December 31, and changes to the income-based repayment program that will make it significantly easier for Mainers to repay remaining undergraduate federal loans.
While federal student debt cancellation has significant impacts for Mainers, more action is needed to fully solve the problem. To grow our economy and increase equitable access to good jobs, Maine should continue to seek ways to lower the cost of higher education and pursue legislation such as LD 1838, a bill passed in the prior session reforming the harmful practice of transcript withholding. And making permanent Maine’s temporary free community college program would create a debt-free path to education.
Learn more via the MECEP Blog: “Student debt cancellation would help working families, improve equity, and expand access to higher education”