US President Joe Biden announced new federal student loan forgiveness measures to address the “unsustainable debt” that borrowers accumulate to complete their college education.
The measure aims to help 125,000 borrowers by canceling $9 billion in debt through existing programs. A total of 3.6 million borrowers will have $127 billion in debt canceled since Biden took office.
“We’re not done yet,” Biden said Wednesday in the Roosevelt Room of the White House.
Here’s what you need to know about loan forgiveness.
Why did Biden announce this now?
Student loan repayments, frozen since the coronavirus pandemic, are restarting this month, with the Biden administration adjusting an earlier failed proposal to provide student loan relief.
Since taking office in 2021, Biden has talked about promoting education reform. He wants to make it easier for Americans to earn a degree by making undergraduate programs free, he said, but first he will address the debt that graduates already face. In total, they have $1.76 trillion in debt.
Earlier this year, the U.S. government tried to cancel loans of up to $20,000 for 40 million borrowers, but the Supreme Court ruled that Biden did not have the authority to force such a step without Congressional approval. and rejected the measure.
Chief Justice John Roberts said: Who has the authority to do that? ”
Has the debt been completely canceled?
Yes, for some people.
Teachers and social workers will be among the 53,000 borrowers eligible for full debt forgiveness, along with others enrolled in the Public Service Loan Forgiveness Program. A total of $5.2 billion in debt forgiveness will be obtained, according to the Department of Education.
The income-based relief program targets 51,000 borrowers who are estimated to owe up to $2.8 billion and 22,000 people, including disabled debtors with permanent disabilities. owes billions of dollars.
What else is on offer?
The Biden administration’s plan would also lower monthly debt payments for low-income people.
“Nobody who has current or future undergraduate loans, whether they went to a community college or a four-year university, will have to pay more than 5% of their discretionary income to repay those loans,” Biden said. announced.
How much has the cost of higher education in the United States increased?
In 1980, the average annual cost for an undergraduate program was $10,231; in 2020, it rose to $28,775. The government’s financial aid to those most in need, known as Pell Grants, has not increased enough to match the increase in fees. As a result, more people are taking out student loans to cover their costs.
Could other groups also be eligible for the debt relief scheme?
The civil rights group the National Association for the Advancement of Colored People (NAACP) is calling on Biden to extend debt forgiveness to Parent PLUS loans. These are loans taken by parents to pay for their children’s higher education.
researchers discovered Forty percent of black graduates have graduate school student loan debt, compared to just 22 percent of white college graduates.
“Historically, education has been seen as a gateway for marginalized communities to achieve upward mobility and begin building intergenerational wealth,” NAACP President Derrick Johnson said in a statement.
“It is unconscionable that black parents, seeking to provide a bright future for their children, have fallen victim to a system that preys on their inherent disadvantage.”
Over the past two years, Biden has repeatedly added new programs to a growing list of efforts to reduce or forgive student loan debt.
“My administration is doing everything we can to get as much student debt relief as possible as quickly as possible,” Biden said.
What other debt relief programs has Biden introduced?
In June of this year, the Biden administration launched the Savings for Worthy Education (SAVE) plan. It’s an income-based repayment system, meaning that borrowers making less than $15 an hour won’t have to make any loan payments and could have their loans erased.
Those making more than $15 an hour must make monthly payments based on their monthly income.
“While this type of relief is life-changing for individuals and their families, it is also good for our economy. It means we can rebuild our lives,” Biden said.
“They can think about buying a house, they can start a business, they can start a family. This is important and important to their daily life,” he added.
Is everyone on board with Biden’s student debt relief plan?
Mr. Biden has called for free community college, but has failed to gain support from Congress. Opponents of the plan say this is Biden’s way of doing something similar without requiring Congressional approval.
In February, former Education Secretary Betsy DeVos joined others in calling Biden’s student loan forgiveness plan illegal.
“Concerns about the rising cost of higher education and unpaid student loans have been part of the public debate for decades (and long before the coronavirus outbreak), but the executive branch “The idea that we could unilaterally cancel student loan debt, a populist-based policy without the authority of Congress, could not be taken seriously,” DeVos said.
Some argue that the relief package unfairly shifts large costs to taxpayers who have already paid off their student loans or are not pursuing further education.