On Wednesday, Aug. 24, President Biden revealed a plan to cancel tens of thousands of dollars in student loan debt for a subset of Americans. The announcement came just ahead of another deadline for the restart of payments for the nation’s $1.7 trillion in federal student loans.
Biden’s loan forgiveness plan, which is explained in detail on a post uploaded to the President’s official Twitter, focuses on individuals earning less than $125,000 per year, or $250,000 as a household, in the 2020 or 2021 tax year.
“An entire generation is now saddled with unsustainable debt in exchange for an attempt at least at a college degree,” Biden said in a press conference, “The burden is so heavy that even if you graduate, you may not have access to the middle-class life that the college degree once provided.”
The impact of the Covid pandemic continues to weigh heavily on the nation. Many middle-class Americans cannot afford to buy a house or are putting off starting a family due to their financial situation.
Americans who took out Pell Grants – grants provided to low-income borrowers – are eligible for up to $20,000 in debt relief. Student loan borrowers who do not have Pell Grants will have loans forgiven up to $10,000.
“If all borrowers claim the relief that they’re entitled to, 43 million federal student loan borrowers will benefit, and of those, 20 million will have their debt completely canceled,” a senior administration official said on a call with reporters on Aug. 24.
According to data from the White House, 60% of student loan borrowers have Pell Grants, so most borrowers will receive the largest forgiveness.
In addition to Biden’s student loan debt forgiveness plan, the President announced an extension of the pause on student loan payments through Dec. 31, 2022.
Biden defended the major decision, saying in a statement on Aug. 24 that there is “plenty of deficit reduction” to fund the proposals. “I will never apologize for helping people and middle-class Americans,” Biden said.
While many Americans have viewed the loan forgiveness plan as a victory, the president’s announcement has received pushback from others, including several Republican politicians and even some notable Democrats.
“Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless,” Jason Furman, former top Obama economic official said in a tweet on Aug. 24.
Some Republicans, such as Senate Minority Leader Mitch McConnell and GOP Senator Ted Cruz, feel that the relief plan is “unfair” to individuals who paid off their student loan debt or did not attend college.
Benjamin Schall (’24) is supportive of President Biden’s plan. “I was happy and excited to hear that there was something being done to help with college affordability,” Schall said.
“I thought ‘it’s not forgiveness of the full debt like was promised, but it’s something,’” Schall said. “I was curious how to get it myself.”
Although Schall is happy some of their student loan debt will potentially be forgiven, they will not receive the same amount as some borrowers. “It’s somewhat disappointing for me, as I don’t have a Pell Grant, because that doesn’t mean that I don’t have to work a lot to make sure I can pay for college or that I won’t struggle to repay loans in the future,” Schall said
“I am happy about what this means for low-income individuals with student debt, though it seems unclear to me whether it will continue to be renewed for future students who would qualify and future debt that current students will accrue,” Schall said.
Schall is hoping the recent student debt forgiveness announcement will get the ball rolling on other major plans.
“The ship seems to have sailed but pushing for better coverage for some of the ideas in the recent Inflation Reduction Act would help Americans financially in the long run, in the case of the climate sections, and in the present, like with the section tackling prescription costs,” Schall said.