The Student Debt Relief Plan Explained
There is a war raging around higher education in America that is reaching a crisis point. For decades, a college degree has been viewed as an achievement that will secure one’s access to a lifetime of opportunities. It means a better job, a better home and, by extension, a better lifestyle. For years, higher education placed one on the track to achieve the American dream. However, statistics now show that college is no longer invaluable but instead unbearable. Young adults in America are tasked with building their futures while often saddled with tens of thousands of dollars in debt. Some are able to pay off their debts through extreme discipline and hard work. This is quite admirable and should not go unnoticed. However, a larger number of Americans are incapable of managing their student loan debt.
In light of this, on August 24th, 2022, President Biden announced the most significant debt relief plan in American history. Addressing student loan debt was a major point in President Biden’s campaign. However, years into his presidency, his voters had not seen this promise fulfilled. This changed slightly on August 24th. The response was overwhelming from both parties; Republicans lamented the weakened economy, and Democrats celebrated the overburdened borrowers. It is the responsibility of each person to determine whether the creation of the Student Debt Relief Plan was an appropriate act. Though the plan was recently blocked, here is some information it so you can understand and judge it for yourself.
The Student Debt Relief Plan is expected to reach nearly forty-three million people. The United States Department of Education has committed to forgiving up to $10,000 in loans per individual borrower, and Pell Grant recipients will receive an additional $10,000 in debt forgiveness, resulting in a total of $20,000. The White House shared that the Relief Plan will only apply to those who individually earn less than $125,000 a year or married couples who collectively earn less than $250,000 a year. This detail applies to everyone who has received student loans, regardless of whether or not they received the Pell Grant while in college.
The collective student debt total in the United States reaches over $1.6 trillion and counting, affecting more than forty-five million American borrowers. As previously stated, the Relief Plan is projected to impact forty-three out of the forty-five million in debt. The Relief Plan will automatically apply to eight million borrowers who will never need to submit an application to the Department of Education (DOE). For those whose income information is unknown by the DOE, a simple application will be accessible sometime in October. Nearly half of U.S. borrowers only have $10-20k in student debt, so they will benefit in total loan forgiveness from this plan. With these numbers, it is evident that President Biden has initiated a comprehensive start to deliver on his campaign promises.
However, promises are hollow if accompanied by inaction. Other than the eight million people aforementioned, everyone eligible for student loan forgiveness must apply through the Department of Education if they desire the forgiveness. If the applications are opened, the required paperwork will likely be similar to the standard FAFSA form.
Many are hesitant to embrace Biden’s student loan reform, as evidenced by the recent stall. A fear for borrowers is that they will be lost in the clogged OFSA. With student loan repayments being unfrozen at the start of the new year, that only leaves OFSA with close to two months to process what will likely be millions of applications. Others are concerned that colleges will justify raising their prices due to the forgiveness plan. This is a possibility that would completely nullify the advancements of the Biden-Harris Administration. The more pressing argument facing President Biden is that he exhibited presidential overreach by enacting his Relief Plan, in that he went beyond the scope of his presidential powers to cancel the national student debt.
Ultimately, each hope and criticism surrounding President Biden’s goals regarding student loan debt is worth paying attention to. Time will tell whether President Biden has extended a lifeline to the American public or has instead ushered an entire generation onto a sinking ship.