🌎 📸 $10,000 of Student Loan Debt Forgiven

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Written by Jenna Cho

$10,000 of Student Loan Debt Forgiven

On Wednesday, August 25th, President Biden announced something he had been hinting at since his primary campaign: he forgave student loan debt. The plan that Biden released included forgiving $10,000 of student loan debt for bowers earning under $125,000 a year as well as extending the pandemic-related payment pause. Out of the $1.6 trillion dollars in student debt across the country, $32 billion was cancelled– a seemingly small portion, but still a milestone considering how little student debt is forgiven in the United States.

The move was heavily criticized by Republicans, who claimed that it was only to secure Democrats’ success in the upcoming midterm elections and would have negative consequences on the economy. Some members of Biden’s own party also criticized his plan but for a different reason: they felt it didn’t go far enough. The progressive wing of the party has been pushing for full debt cancellation instead of just a portion and was disappointed with the amount forgiven.

Soon after the Inflation Reduction Act passed, Biden released another plan to ease the economic burden on those who need it most. Forgiving $10,000 and extending the payment pause is a bold step in the right direction to improving the lives of those in debt. Over 100,000 people now have $10,000 less in debt to worry about. Although the amount could have been more, it will still go a long way to help people trying to repay their debt considering how much interest banks add.

College is too expensive considering the growing necessity for college degrees in the workforce. It would be far easier to forgive more student debt than it would cap the prices colleges are able to charge their students, so that would be the best option. Hopefully, Democrats can keep their majority in both houses and use it to continue to cancel the debt.

Biden’s recent announcement for student loan forgiveness has been met with a spectrum of reactions. On Wednesday President Biden announced a plan that would forgive between $10,000 to $20,000 of student loan debt to borrowers. Those that qualify for forgiveness could apply as early as the beginning of next year. The proposed plan is estimated to cost at least $300 billion. In the United States, 45 million people own over $1.6 trillion in federal college loans. Since 60% of borrowers were Pell grant recipients, a stipulation for up to $20,000 loan forgiveness, a large percentage of borrowers would qualify for the program.

Democrats have been divided over whether the bill provides enough relief. The Republican National Committee has stated the program is “Biden’s bailout for the wealthy”(Kanno-Youngs). It is estimated the plan will cost the average American $2,503.22, according to the National Taxpayers Union. According to one Harvard economist Jason Furman, “[the plan] would unnecessarily provide tens of thousands of dollars to many high-income households in a way that goes well beyond even what he promised in the heat of a Democratic primary when the problem facing the country was low inflation — not high inflation.”(Kanno-Youngs). The effect of the plan on inflation, which is already at a record high, has been a large concern for many.

Another concern with the plan was described by A republican senator, Ben Sasse, who was quoted as saying the plan “forces blue-collar workers to subsidize white-collar graduate students. Instead of demanding accountability from an underperforming higher-education sector that pushes so many young Americans into massive debt, the administration’s unilateral plan baptizes a broken system. “Forgiving the debt for some does not address the actual problem which is the high cost of higher education in the United States. Instead, it simply shifts the burden to the federal government and ultimately to taxpayers.

There is undoubtedly a debt crisis in the United States, and student debt is a major contributor. There is no reason that the richest nation in the world has so many of its citizens suffering under piles of debt. Ironically, one thing often overlooked in discussions of forgiving student loan debt is the fact that college is ridiculously expensive. Essentially, college prices are the same thing as “paywalls” in video games— a purchase that needs to be made to progress to the next level without hours more of struggle.

Things like aggressive student debt enforce the cycle of poverty: those misfortuned can either get a college degree in hopes of lifting themselves out of poverty just to get beaten down by student debt, or they can avoid the debt and work a minimum wage job. Once again, I encourage policymakers and sceptics to look at the Nordic countries as an example of what to do in regard to college prices and student debt. Yes, $10,000 is something, but considering that in 2020 the average 4-year graduate had an average of $28,400 in debt it wasn’t enough. It isn’t too much to ask for government relief to be as generous for good students as it is for businesses. Many had hundreds of thousands of dollars in PPP loans forgiven, so the idea that the money “isn’t there” to forgive most of not all of the student debt is faulty.

The debt forgiveness plan proposed by Biden will not ultimately fix the problem. The plan does not address a huge problem in America which is a broken University system. No longer can people merely work a part-time job and support themselves through college. This idea has become a fantasy for many. Instead, Americans are forced to take out thousands of dollars worth of debt in order to try and gain a higher education. What really needs to occur is legislation preventing the arbitrary increase of tuition at Universities rather than having the Federal government foot the bill. Without any change in the education system, this plan proposed by Biden will never succeed in truly helping Americans seeking higher education. Instead, it adds to the over $28 trillion debt the federal government has. This money lost to the government due to student loan forgiveness will have to be recouped by higher taxes, spending cuts or outright borrowing. The plan is a political statement to try and gain votes for the democratic party during mid-terms and raise the President’s approval rating which has been in the sewer for months. In the end, it doesn’t combat the origin of the problem or fix anything long-term.

Written by Alexis Walker

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