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The White House announced a few days ago that President Joe Biden signed a law to forgive certain student loans. In a press release from the White House, it is explained why President Biden signed the loan forgiveness program.
“President Biden believes that a post-high school education should be a ticket to a middle-class life, but for too many, the cost of borrowing for college is a lifelong burden that deprives them of that opportunity,” the press release said. “During the campaign, he promised to provide student debt relief. Today, the Biden Administration is following through on that promise and providing families breathing room as they prepare to start re-paying loans after the economic crisis brought on by the pandemic.”
The price of college tuition has tripled over the past four decades, and federal aid has not been able to keep up with the increase. In the past, financial aid covered at least eighty percent of the tuition from a four-year college. However, it is only able to cover approximately one third of the current cost of tuition.
This has forced prospective students to borrow approximately $25,000. This leaves the undergraduate student walking across the stage in significant debt before even entering the workforce. Some students have difficulty finding employment in their field of study.
The federal student loan debt is a whopping $1.6 trillion and rising every day. This is a significant burden on America’s middle class. The high monthly payments and ballooning balances on the loans make it difficult for middle-class borrowers to buy homes or save money for retirement.
President Biden announced that he is implementing a three-part plan to “provide more breathing room to America’s families as they continue to recover from the strains associated with the COVID-19 pandemic.” This plan offers “targeted debt relief as part of a comprehensive effort to address the burden of growing college costs and make the student loan system more manageable for working families.” Under the plan, the Department of Education will: Provide debt relief to assist families who have struggled with finances from the pandemic. It will provide up to $20,000 in debt relief to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt relief to non-Pell Grant recipients.
To be eligible for this debt relief, borrowers’ income must be less than $125,000 or $250,000formarriedcouples. Cut monthly payments in half for undergraduate loans. The Department of Education is wanting to offer a new income-driven repayment plan. It will protect more low-income borrowers from making any payments. It will also cap the payments for undergraduate loans at five percent of the borrower’s discretionary income.
The new plan will make the payments half of what borrowers are currently paying. To give a reference, this will cut the average monthly payment of $1,000 in half.
The plan will also defer payments for the loan till December, 31 2022. It will be the final deferment Many politicians are opposed to the plan, and have made their objections known. US Representative Tim Ryan, Dem. said in a statement that President Biden is paying off his own family’s student loans and that “waiving debt for those already on a trajectory to financial security sendsthewrongmessage to the millions of Ohioans withoutadegreeworkingjust as hard to make ends meet.”
US Senator Catherine Cortez Masto, Dem. disagreed with President Biden and that the executive plan should “target loan forgiveness to those in need and actually make college more affordable for working families.”