Current:Home > MarketsPPP loans cost nearly double what Biden's student debt forgiveness would have. Here's how the programs compare. -FundPrime
PPP loans cost nearly double what Biden's student debt forgiveness would have. Here's how the programs compare.
View
Date:2025-04-14 01:49:11
After the Supreme Court reversed President Biden's student-loan forgiveness plan, critics of the decision are pointing to other recent examples of the government forgiving debt —many with far larger amounts of money than at stake than in the student loan plan.
In particular, the Paycheck Protection Program has so far forgiven $757 billion in loans to private businesses, according to government databases — nearly double what the Biden administration's student-loan forgiveness would have cost.
Mr. Biden made that comparison in a press conference on Friday afternoon, pointing out that many members of Congress received PPP loans that were forgiven.
- Supreme Court blocks student loan forgiveness in blow to Biden. Here's what to know about the ruling.
- Biden lays out "new path" for student loan relief after Supreme Court decision
- When do student loan payments resume? Here's what today's Supreme Court ruling means for the repayment pause.
"I was trying to provide students with $10,000 to $20,000 in relief," Biden said. "The average amount forgiven in the PPP program was $70,000."
He added, "The hypocrisy is stunning."
How much in PPP loans was forgiven?
The government, through the Small Business Administration, gave out nearly $790 billion in PPP loans between March 2020 and May 2021, when the program ended, public records show. Of that amount, $757 billion has been forgiven.
The recipients include two dozen members of Congress who received between $79,000 and $3.4 million apiece for businesses, according to reporting at the time.
- How did each Supreme Court justice vote in today's student loan forgiveness ruling?
- Here's what to know about the Supreme Court ruling on student debt
While the PPP did preserve up to 3 million jobs for one year, according to one study from economists at MIT and the Federal Reserve, the major beneficiaries of that money were business owners and shareholders —not workers.
Between two-thirds and three-quarters of the PPP's benefits "did not go to paychecks, however, but instead accrued to business owners and shareholders," the study found, estimating that "about three-quarters of PPP benefits accrued to the top quintile of household income."
How much did the government spend on pandemic relief?
The government also spent nearly $700 billion on enhanced unemployment benefits and $860 billion on direct payments in the form of stimulus checks, according to public data tracked by the Committee for a Responsible Federal Budget.
How much would student loan forgiveness have cost?
The Department of Education relied on the 2003 HEROES Act as its legal justification for wiping out roughly $430 billion in debt, while the Biden student-debt relief plan would have cost as much as $519 billion over 10 years, according to an estimate from the Penn Wharton Budget Model, a nonpartisan group that examines the economic impact of public policies.
About two-thirds of the benefit would have gone to households earning less than $88,000 a year, the group estimated.
Why was the PPP loan forgiveness program legal?
The PPP program as well as the student loan forgiveness plan "were both programs that were established to address the impact of the national emergency," said Abby Shafroth, director of the Student Loan Borrower Assistance Project at the National Consumer Law Center. "Both programs recognized that the pandemic was enormously economically disruptive."
However, the two programs rely on different laws.
PPP was authorized as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020. From the start, the loan program was designed to be fully or partially forgiven, as long as the businesses used the money for eligible expenses such as payroll.
"Embedded within the PPP was this idea that it could be forgiven from the very beginning," noted Chavis Jones, associate counsel in the educational opportunities project at the Lawyers' Committee for Civil Rights Under Law.
The PPP loans never faced the same scrutiny — or legal challenges — as student debt relief, experts said.
But, Shafroth noted, "As soon as the student loan program was announced, critics and opponents backed by billionaire organizations attacked the program and filed briefs in court challenging it," she said.
Why was the student loan program struck down?
Student loan forgiveness, the Biden administration argued, was authorized under the HEROES Act, which Congress passed in the wake of the September 11 terrorist attacks and later expanded.
Since 2003, the act held that the Secretary of Education could "waive or modify any statutory or regulatory provision" in the case of a national emergency. The Trump administration used this authority to pause student-interest loan repayments in 2020.
A lawsuit from six Republican-led states asked the Supreme Court to consider whether the Secretary of Education had the authority to forgive student loan debt under the HEROES Act. On Friday, the high court ruled that the law does not grant the secretary that authority.
Both the PPP and student debt relief "were created to remedy the economic harms during the pandemic," Jones said. "What we do know is the PPP loans disproportionately impact people of greater means, and we know the student debt relief program impacts those who are more economically vulnerable."
He added, "Once again, people with lesser means and those who are economically vulnerable have taken a gut punch of sorts."
- In:
- Biden Administration
- paycheck protection program
- Student Debt
veryGood! (73528)
Related
- Military service academies see drop in reported sexual assaults after alarming surge
- Earthquakes happen all over the US, here's why they're different in the East
- Man United and Liverpool draw 2-2 after late Mohamed Salah penalty
- Fans return to Bonnie Tyler's 'Total Eclipse of the Heart' ahead of total solar eclipse
- Why we love Bear Pond Books, a ski town bookstore with a French bulldog 'Staff Pup'
- Sonequa Martin-Green bids farewell to historic role on Star Trek: Discovery
- Following program cuts, new West Virginia University student union says fight is not over
- Off the Grid: Sally breaks down USA TODAY's daily crossword puzzle, Jazz Up
- Juan Soto to be introduced by Mets at Citi Field after striking record $765 million, 15
- RHOC Alum Lauri Peterson's Son Josh Waring Dead at 35
Ranking
- Off the Grid: Sally breaks down USA TODAY's daily crossword puzzle, Triathlon
- WrestleMania 40 winners, highlights from night one: The Rock returns and much more
- New York City to pay $17.5 million to settle suit over forcing women to remove hijabs for mug shots
- ALAIcoin cryptocurrency exchange will launch a series of incentive policies to fully expand its new user base.
- Rolling Loud 2024: Lineup, how to stream the world's largest hip hop music festival
- ALAIcoin cryptocurrency exchange will launch a series of incentive policies to fully expand its new user base.
- Old Navy’s Sale Is Heating Up With up to 70% off and Deals Starting at Under $10
- ‘Godzilla x Kong’ maintains box-office dominion in second weekend
Recommendation
Juan Soto to be introduced by Mets at Citi Field after striking record $765 million, 15
Zambians Feel the Personal Consequences of Climate Change—and Dream of a Sustainable Future
Mexico severs diplomatic ties with Ecuador after police storm its embassy to arrest politician
WrestleMania 40 winners, highlights from night one: The Rock returns and much more
Travis Hunter, the 2
Vince Carter headlines class of 2024 Naismith Basketball Hall of Fame inductees
South Carolina coach Dawn Staley thinks Iowa's Caitlin Clark needs a ring to be the GOAT
Pat Sajak's final 'Wheel of Fortune' episode is revealed: When the host's farewell will air