UPDATE (6/30/23): The Supreme Court has struck down the Biden administration's one-time student loan forgiveness plan. Loan payments are expected to restart in October 2023. You can read more information here.
Biden’s plan would have forgiven $10,000 in student loan forgiveness to individuals making less than $125,000 per year and couples making less than $250,000. Borrowers who went to college on Pell Grants would receive up to $20,000 in debt forgiveness if they meet the same income thresholds.
In response to criticism of the proposed plan, people on social media, including Sen. Bernie Sanders (D-Vt.), have claimed that Paycheck Protection Program (PPP) loan forgiveness averaged $95,700 per borrower, a significantly larger amount than the maximum of $20,000 in student loan forgiveness.
The PPP, aimed at helping businesses keep their workers employed during the COVID-19 pandemic, offered loans worth up to $10 million to most small businesses, individuals and nonprofit organizations with fewer than 500 employees through May 2021.
Is the average amount forgiven for PPP loans greater than $20,000?
Yes, the average amount forgiven for PPP loans is greater than $20,000.
WHAT WE FOUND
More than 10 million out of 11.5 million loans issued had been partially or fully forgiven as of October 2022, according to the PRAC. The committee also found that the average amount of loan forgiveness was $72,100 – over $50,000 more than the maximum amount of student loan forgiveness.
The U.S. Treasury Department explains on its website that PPP borrowers may be eligible for forgiveness if the funds they received “were used for eligible payroll costs, payments on business mortgage interest payments, rent, or utilities” within eight or 24 weeks after receiving the loan. Borrowers can apply for forgiveness once they have used all of the money granted to them by their loan.
So where did Sanders get the $95,700 figure that he shared in his tweet? It came from earlier figures that were accurate at the time he posted on Twitter.
PRAC previously stated that the average dollar amount forgiven for PPP loans was $95,700 as of June 30, 2021, the same figure Sanders shared in his viral tweet one day before updated numbers were released. At that time, 4.1 million loans out of a total of 11.8 million had been forgiven.
The Small Business Administration (SBA) explained in an email to VERIFY that the “average loan size for PPP loans in 2021 was much lower,” which drove down the average calculated in July 2022 as those loans were forgiven.
SBA also clarified why the number of loans issued dropped from 11.8 million as of June 30, 2021 to 11.5 million as of July 4, 2022, writing that “many of the loans that were undispersed when the program ended were eventually canceled.”
Cost of PPP compared to student debt forgiveness
The Committee for a Responsible Federal Budget estimates that changes established by Biden’s student loan forgiveness program would have cost an estimated $500 billion over the next 10 years, with $360 billion going toward student debt cancellation between $10,000 to $20,000.
The PPP has loaned a total of $793 billion to small businesses as of July 4, 2022, forgiving $742 billion worth of those loans.
But Andrew Lautz, director of federal policy at the National Taxpayers Union Foundation, told VERIFY that PPP loan forgiveness and student debt relief is “not quite an apples to apples comparison.”
“I think one important thing to keep in mind is Congress designed PPP…as a loan program. But really, they designed it as a loan that would pretty much be automatically forgiven, as long as companies kept workers on their payroll,” he said.