The Discourse Surrounding and What You Need to Know
On August 24th, President Biden and his administration announced his new student loan forgiveness plan. This action forgives up to 10,000 dollars in student debt and up to 20,000 for Pell Grant recipients, wherein the “up to” refers to only the amount of debt and nothing extra. (i.e. an individual with 8,000 of student debt will receive 8,000). Though something is better than nothing when it comes down to the ongoing student loan debt crisis, students with upwards of 100,000 dollars in debt could consider this a slap in the face.
Nonetheless, this decision is met with praise coming from citizens suffering from academic debt and has been celebrated as a game changer for the increasing number of individuals graduating with debt. On Twitter, many individuals are exclaiming how this forgiveness plan allows them to finish paying off debt within their lifetimes. As of August 2022, the student loan debt totals 1.75 trillion dollars. A January 2022 Census found that approximately 1 in 7 Americans have student debt. Having these burdens lifted means extreme differences in quality of life for millions of Americans, in both financial and mental health.
The announcement has also been met with some criticism from those who reworked their whole life to avoid student loans and are concerned that this use of taxpayer money would be better spent elsewhere; colleges should instead lower their tuition or provide loan forgiveness out of their own pockets. Alternatively, there is the very real idea that 10 to 20,000 doesn’t really quite cut it for many Americans who graduated with hundreds of thousands of student debt. This plan also ignores the demographic of Americans that are most heavily impacted by student debt. The Brookings institute completed a study that found that “Four years after graduation, the average Black borrower owes $53,000, while the average white borrower owes $28,000.” And so while 10,000 is better than nothing, it doesn’t solve the initial barriers of costly education in the first place, which severely impacts disenfranchised communities. There is also the question of whether Biden’s new plan will continue in some shape or form in the future; the announcement of this plan will likely change how many incoming students (both undergraduate and graduate) will apply for loans themselves. Many have argued that the debt forgiveness shouldn’t come from taxpayer money, but instead from the colleges that have continually raised their tuition fees. Many are skeptical that the loan forgiveness plan places a burden onto citizens that should be placed on the universities that are the cause of so much debt within the United States.
Still, this plan is a step in the right direction for alleviating millions of dollars of financial stress from Americans and setting a precedent for the importance of less expensive education.
Now, here are some anticipated questions and answers.
How do I Know if I am Eligible for Debt Cancellation?
Applicants with individual annual incomes less than 125,000 and family incomes less than 250,000 are eligible.
If you are a Pell Grant recipient, you are eligible for up to 20,000 in relief.
If you are not a Pell Grant recipient, you are eligible for up to 10,000 in relief.
When and How Can I Apply?
Borrowers are encouraged to apply before November 15th to receive half of their relief before December 31st.
In October, the Biden Administration is set to roll out a simple application for reporting annual income if the U.S. Department of Education does not yet have this information.
What is the Public Service Loan Forgiveness Program PSLF and How Can I Apply?
The bill signed into effect also incorporates a full loan forgiveness program (PSLF) for borrowers who are employed by nonprofits, the military, or federal, state, Tribal, or local government.
The PSLF program changes its policies on October 31st of this year, so those interested should do so as soon as possible.
Visit PSLF.gov for more information.