Letter from President Makola M. Abdullah: Student Loan Forgiveness Relief Plan
Greetings VSU Trojan Family,
As many of you heard today, President Biden announced the most comprehensive, far-reaching student loan debt relief plan in American history. The newly announced three-part plan delivers on President Biden’s promise to cancel $10,000 of student debt for low- to middle-income borrowers. This plan will directly affect the Virginia State University community as Biden has noted that the average Black borrower will see his or her balance cut nearly in half, and more than one in four will see their balance forgiven altogether.
As part of the plan, the Department of Education will:
- Provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 ($250,000 for married couples). To ensure a smooth transition to repayment and prevent unnecessary defaults, the pause on federal student loan repayment will be extended one final time through December 31, 2022. Borrowers should expect to resume payment in January 2023.
- Make the student loan system more manageable for current and future borrowers by:
- Cutting monthly payments in half for undergraduate loans. The Department of Education is proposing a new income-driven repayment plan that protects more low-income borrowers from making any payments and caps monthly payments for undergraduate loans at 5% of a borrower’s discretionary income. This means that the average annual student loan payment will be lowered by more than $1,000 for both current and future borrowers.
- Adjusting the Public Service Loan Forgiveness (PSLF) program by proposing a rule that borrowers who have worked at a nonprofit, in the military, or in federal, state, tribal, or local government, receive appropriate credit toward loan forgiveness. These improvements will build on temporary changes the Department of Education has already made to PSLF.
- Protect future students and taxpayers by reducing the cost of college, maximizing Pell Grants, and focusing on keeping college cost under control.
The President’s action will directly affect the Virginia State University community as currently nearly 69% of our undergraduates are fully Pell Grant-eligible. In addition, the median federal loan debt among borrowers who completed their undergraduate degree at VSU is approximately $29,000. Under Biden’s plan, as much as $20,000 of that loan debt could be forgiven.
Virginia State University remains one of the best values in education. We are the Commonwealth’s most affordable four-year institution. And today’s news makes a tremendous difference to thousands of Trojans who worked hard to earn a transformative education and have faced the burden of debt connected to that privilege.
This move by the Biden Administration has the potential to affect more than a million VSU and other HBCU alumni around the nation. The Virginia State University administration is appreciative to the Biden administration for this bold move which will help to change the financial trajectory of millions of graduates. We are immensely grateful.
Read the full White House FACT SHEET regarding this announcement.
We are GREATER,
Makola M. Abdullah, Ph.D.