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Student loan forgiveness to benefit 120,000 Montanans

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The U.S. Department of Education estimates that 120,400 Montanans qualify for some degree of the student debt forgiveness under a plan announced by President Joe Biden last month.

A substantial number of the those who qualify, 78,600, were Pell Grant recipients, meaning they qualify for the maximum $20,000 in debt forgiveness. Pell Grants are given only to students with exceptional need, most with household incomes of less than $30,000 a year, according to DOE.

Non-Pell recipients earning less than $125,000 a year could receive debt cancellations for up to $10,000. Student loans are the norm at Montana universities and colleges for first-year, full-time students, of which roughly 80% have borrowed money in the past decade. About 61% of Montana university graduates have taken out loans, the average owed is about $27,290 for degree recipients who attended school as state residents.

“It means more breathing room for millions of families,” said James Kvaal, Department of Education undersecretary, during a Tuesday press call. “It means renters pursuing their dream of homeownership. It means parents who thought they'd be paying student debt for the rest of their lives can now save up for their own children's education.”

The loan forgiveness hasn’t been viewed favorably by Montana’s elected Republicans. Gov. Greg Gianforte joined other Republican governors in asking Biden to scrap the loan forgiveness plan, characterizing the move as a benefit to society’s “elites” at the expense of taxpayers.

U.S. Sen. Steve Daines called the loan forgiveness “utterly unfair, wildly irresponsible and clearly unconstitutional,” also characterizing the forgiveness as burdensome to Montana taxpayers, the day Biden’s plan was announced.

Kvaal said Tuesday that the Department of Education expects the loan forgiveness plan to pass legal muster as something Education Secretary Miguel Cardona can do to offset financial harm from the pandemic.

“We have looked at the issue of the Secretary's legal authority to carry out this action quite extensively. We've looked at it from every angle. The Secretary has clear authority to protect borrowers from financial harm resulting from the pandemic and we're quite confident that he has the authority to carry out this,” Kvaal said.

Tuition and fees at Montana’s flagship universities was $7,500 a year in the 2021-2022 school year, according to the Montana University System. Smaller colleges cost less than $6,000. The state of Montana has frozen tuition in 14 of the last 15 years at two-year colleges to manage the student cost of education. Smaller colleges have experienced tuition freezes in 11 out of the past 15 years, while the flagship schools in Missoula and Bozeman have experiences tuition freezes in nine of the past 15 years.

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When President Joe Biden announced a plan to forgive student loan debt, many borrowers who kept making payments during the pandemic wondered if they’d made the right choice. Borrowers who paid down their debt during a pandemic freeze that started in March 2020 can in fact get a refund — and then apply for forgiveness. But the process for doing that hasn’t always been clear. The Department of Education says borrowers who hold eligible federal student loans and have made voluntary payments since March 13, 2020, can get a refund.

House Democrats are proposing new legislation that would increase federal student aid, lower interest rates on loans and take other steps to make college more affordable. The bill is meant to build on President Joe Biden's student debt cancellation and prevent heavy debt for future generations of students. It would double the amount of the federal Pell Grant, lower interest rates on student loans and loosen rules for Public Service Loan Forgiveness. The election-season bill has dim odds of passage in the House and virtually no hope in the Senate. Still, it spells out Democratic priorities as both parties vow to address the nation’s ballooning student debt. Republicans proposed their own legislation in August, looking to rein in student loan borrowing.

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