Biden’s Plan to Relieve Student Debt

By Savitha Srinivasan – Correspondent

In an effort to help working and middle-class students who took loans, President Biden, Vice President Harris, and the U.S. Department of Education have announced a three-way plan. 

Many students were not able to keep up with their regular payments, due to the pandemic, so the program is meant to ease borrowers back into their normal payments. The plan offers loan forgiveness of up to $20,000 to Pell Grant recipients and up to $10,000 for non-Pell-Grant recipients, all for people who earn under $125,000 a year. The plan is targeted toward working and middle-class families the amount is based off yearly income.

President Joe Biden compared the relief program to loans given during the pandemic to small businesses. “No one complained that those loans caused inflation. A lot of these folks and small businesses are working and middle-class families. They needed help. It was the right thing to do,” he said.

The cost of education beyond high school has increased significantly. The total cost to attend a public university, for 4 years, has nearly tripled in 40 years. Instead of funding more many states have cut back on support for state universities, forcing students to pay more.

For 50 years, Pell Grants have been the key solution to helping low-income families, specifically families earning less than $60,000 per year, send their kids to college. These Pell Grants used to cover 80 percent of the full cost of a public 4-year college. Now, however, they only cover around 32 percent more than one-third of what they used to cover.

Biden says this will have a great effect on the next generation. “An entire generation is now saddled with unsustainable debt in exchange for an attempt, at least, at a college degree,” he said.

The debt is so burdensome that even if a person graduates, they may not receive the middle-class life the college degree would otherwise provide. Many people like this are not able to pay for a mortgage for a house because of the debt. They aren’t able to place a down payment anyways. The dreams of starting families and businesses are also put off due to the debt. A third have to leave school due to the financial strain and are left with debt and no degree. The debt is especially hard on Hispanic and Black families who on average earn less. The pandemic made things worse.

Freshman Amulya Ponnapalli says the effects of debt reach many people. “It can be restraining for college students, as they might not be able to accomplish big goals that they have for their lives, like building up savings to buy their own house or to collect for retirement,” she said. 

“Being in debt from college would mean that graduating students would not have the money to start a business of their own if they chose to do so, and without new businesses joining the economy, there would be a fewer number of job openings and opportunities for many others in the world,” she added.

Biden said he would be working closely with the Secretary of Education to lessen the burden of student debt. “[We are going to] provide more breathing room for people so they have less burden by student debt and, quite frankly, to fix the system itself,” he said.

Biden promised that no high-income individual or high-income families in the top 5 percent of incomes will be profiting from the program. About 90 percent of people eligible make under $75, 000 a family.  43 million people will benefit from the program, over 60 percent of them being Pell Grant recipients, meaning 27 million people will get $20, 000 of debt knocked off. 20 million people will have their debt fully canceled.

Biden was firm with his decision and responded to the calls for this program to stop. “I will never apologize for helping Americans working — working Americans and middle class, especially not to the same folks who voted for a $2 trillion tax cut that mainly benefitted the wealthiest Americans and the biggest corporations, that slowed the economy, didn’t do a hell of a lot for economic growth, and wasn’t paid for and racked up this enormous deficit,” he said.

“The outrage over helping working people with students — with student loans, I think, is just — simply wrong.  Dead wrong,” Biden added.

The Biden administration is also proposing an income-driven repayment plan. Originally people would only have to pay 10% of their discretionary income, the income left after necessities are paid, but with the plan, it’s going to be cut in half. Then, once you’ve paid for 20 years, you’ll be finished with the payments. If your original balance was less than $12,000 you can stop in 10 years.

The states that filed a suit against the relief program, Nebraska, Missouri, Arkansas, Iowa, Kansas, and South Carolina, are arguing that Biden is using Covid as an excuse to implement the relief program.

Mike Pierce, executive director of the Student Borrower Protection Center, is calling for the 9 justices to keep in mind their own circumstances compared to the people who benefit from the program when judging the case. “I think it’s fair to say that [the justices] didn’t live the experiences of the people that benefit from the president’s debt relief program. And it’s important for them to go into this case understanding the limits of their own life experience and how that might affect their ability to be impartial considering case,” he said.

Some reasons for the opposition are that with the debt relief, it will be harder for the military to recruit since one of the appeals was free education. Some are wondering why taxpayers who did not go to college should foot the bill for those who did. All of the arguments have a common belief in personal responsibility. Since it is the choice of the person to take the loan, they should be aware of the consequences and be prepared to pay back the loan.

The GOP discussed the relief program and argued the negative effects of the relief program on the youth of the future. They claimed that it would “drive up the cost of college tuition and send the message that students who make irresponsible borrowing decisions will ultimately be bailed out by the federal government.”

Biden identified the real purpose of the program and his goal. “It’s about opportunity.  It’s about giving people a fair shot.  It’s about the one word America can be defined by: possibilities.  It’s all about providing possibilities,” he said.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s