Biden Announces Student Debt Relief Plan

Posted by on Sep 1, 2022 in Current Events, Government

Student loan debt is at an all-time high. Right now, the average public university student must borrow $32,880 to pay for a bachelor’s degree. As of 2022, student loan debt in the United States totals $1.748 trillion. Forty-three million Americans have student loan debt, with an average debt load of $37,667. Last week, the Biden administration announced that it will forgive up to $20,000 per borrower in federal student loan debt. Here, btw takes a closer look at the details of this program. 

Reviewing the Plan 

 Borrowers who make less than $125,000 per year will have $10,000 of their federal student loan debt cancelled. Borrowers who make less than $125,000 per year and receive federal Pell Grants will have $20,000 of their federal student loan debt cancelled. Under this new program, about 43 million Americans will have their debts reduced, and 20 million people will have their student debt completely erased. Experts estimate that the plan will cost more than $300 billion.  

How It Can Help 

Debt forgiveness will give tens of millions of Americans more money to spend on other things, such as a down payment on a home or funding their own children’s college education. Also, the White House argues that student loan forgiveness is an equity issue. An estimated 90 percent of the debt relief would go to people making less than $75,000 per year.  

This program will especially help African American students. About 71 percent of African American students take out student loans, compared with 56 percent of white students. African American college graduates owe about $25,000 more in student debt than white students. In fact, almost two-thirds of the total outstanding student loan debt in the United States belongs to African American women. Currently, about one out of every four African Americans owes more money than they earn each year.  

Biden’s student debt relief plan will help more than half a million African Americans begin to overcome this debt problem. This is important because it helps to address the larger issue of income inequality. In 2019, the average white household held nearly eight times the wealth of the average African American household.  

Arguments Against 

People that disagree with this debt forgiveness plan say that it is not fair to people who have already paid their college-related debt. Many people who might have otherwise gone to college chose not to because they were worried about  increasing debt. Still others may have chosen colleges based on what they thought they could afford.  

How to Qualify for the Program 

Millions of Americans have already qualified for the program because the Department of Education has their information due to existing loan documentation. In October, the White House says that it will establish an application process for people requesting debt relief or to check that their information is already on file. The process of having debt erased will take four to six weeks. 

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