A growing number of colleges and universities have announced in recent weeks that they would be cancelling student debt for their graduates using funds from President Biden’s recent stimulus bill.
Elizabeth City State University in North Carolina announced last week that it would be wiping out $286,500 in student debts owed directly to the school due to the COVID-19 pandemic.
“The administration is aware that the COVID-19 crisis caused financial hardships for many students and their families,” said Provost Farrah J. Ward in a statement to WAVY News. “As the pandemic and its impact continue to affect our students, we are committed to finding ways to support the Viking Community through this crisis.”
The University stated that it would be using stimulus money from the American Rescue Plan — the $1.9 trillion relief package that President Biden signed into law in March. After passage of the bill, Education Secretary Miguel Cardona updated policy guidance allowing colleges and universities to use stimulus funds for a variety of student needs, including cancelling student debt in certain cases.
“Many students have had their postsecondary careers turned upside down as they manage their schoolwork while also protecting themselves from this virus,” said Education Secretary Cardona in March when he announced the policy change. “We hope every eligible student takes advantage of these benefits while continuing to focus on their studies.”
Elizabeth City State University is not the only college to cancel student loan debt for its students, and it may not be the last. Wilberforce University, a historically Black university in Ohio, announced it would be doing the same, cancelling over $375,000 in student debt for students enrolled in 2020 and 2021. And Delaware State University announced in May that it will be forgiving over $700,000 in student loan debt to at least 200 students facing hardships due to the pandemic.
Other schools are announcing debt-free enrollment options for students to prevent them from accumulating student loans to begin with. Dartmouth College announced this week that it would be eliminating student loans for families earning $125,000 per year or less. “Our next step is to try to increase it to $150,000,” said Presidential Commission on Financial Aid co-chair Julie McKenna in a statement to The Dartmouth. Debt-free enrollment at Dartmouth would not be funded through stimulus money.
Importantly, these latest student loan forgiveness initiatives only pertain to debts owed directly to the institutions, rather than to the government or to a private student loan lender. Still, institutional student loan debt can be a serious problem for students and borrowers. These types of debts are typically ineligible for federal student loan relief and forgiveness programs like income-driven repayment, Public Service Loan Forgiveness, or the CARES Act moratorium on student loan payments and interest. Furthermore, failure to pay these debts can result in serious and lasting consequences including academic transcript withholding and inability to re-enroll, transfer credits, complete a degree program, or pursue a secondary degree.
Student loan borrower advocates and their progressive allies in Congress continue to pressure President Biden to use executive action to enact broad student loan forgiveness on a mass scale. Biden has expressed skepticism of such an approach. The administration is reviewing its options, however, and Biden has ordered attorneys at the U.S. Department of Education and the Department of Justice to conduct a legal review of student loan forgiveness options. That review is ongoing.