By Dina Usanovic
During the 2020 election, many promises were made by both candidates surrounding higher education. One of the most attractive promises made was by President-elect Joe Biden, who claimed that, if elected into office, he would enact a plan that would forgive a portion of student debt and possibly provide free tuition for public and state colleges. This ambitious plan surprised many college students, giving them hope. However, it is important to clarify that all student debt will not be totally forgiven, and all college tuition will not be free.
Biden’s plan has a few stipulations. First, Biden has recommended canceling only federal student loans for those attending a public university or college, those who used the loans to pay off undergraduate tuition, and those earning less than $125,000 a year. While these stipulations restrict who receives loan forgiveness, it still offers the forgiveness option for millions of students currently struggling with their loans. Biden has also supported forgiving $10,000 for all federal loans as COVID-19 relief. While Biden’s plan focuses on forgiveness for only federal loans, he intends to make it easier to discharge private loans in bankruptcy.
Another portion of Biden’s plan includes a revised income-driven payment. Currently, people repaying student loans must contribute 10-20% of their discretionary income for payments. Biden intends to lower this contribution to a maximum of 5% of discretionary income. Along with that, those who make $25,000 or less could qualify for $0 monthly payments. After 20 years, Biden’s plan would forgive any remaining balance, tax-free. However, these revisions only apply to undergraduate loans, again.
More loan forgiveness is possible for those who provide a public service, such as school workers, government workers, and non-profit employees. For these people, $10,000 will be automatically cancelled for every year of public service, for up to five years. However, 120 eligible payments must be made before the remaining balance is forgiven. It is also important to note that, according to the Department of Education, nearly 98% of Public Service Loan Forgiveness applications have been rejected.
While Biden’s loan forgiveness seems to offer many benefits without going too far, there are a few issues. First, this loan forgiveness plan is intended to boost the economy. Forbes magazine, however, claims that it would offer a tiny boost in the economy while costing $300 billion. Along with that, it only helps undergraduate loans, leaving graduate students in the dust. This is especially disheartening, as graduate loans are often much higher than undergraduate loans. Biden’s loan forgiveness program is an incredible start, and offers tons of help for many undergraduate students. However, it is just a start.