On August 24th, 2022, President Joe Biden announced a plan to ease the Union’s collective student loan debt. [...] However, this still isn't enough for a lot of people.
You’ve probably heard the buzzword-filled phrase “student loan forgiveness” on the radio recently. You’ve probably heard that it’s going to help some people, and you’ve probably heard that some people hate it. But what is this plan, and why do some people hate it?
On August 24th, 2022, President Joe Biden announced a plan to ease the Union’s collective student loan debt. As of September 7, 2022, this country's collective student loan debt totals more than $1.6 trillion, owed by approximately 43 million borrowers, according to Forbes’ latest report. This is a rightfully appalling number, and Biden’s plan—although it may not greatly relieve the overall debt—is meant to take a weight off the shoulders of people who are deeply in debt or are generally concerned about their ability to pay back their student loans.
As outlined by the Federal Student Aid office of the U.S. Department of Education, the plan is a three-pronged approach to relieving the debt crisis.
Part One of the plan is to extend the loan payment pause through the end of the year, with payments resuming on January 1st, 2023. The pause was instituted by Biden and Vice President Kamala Harris when they took office and has since been extended multiple times.
Part Two is the actual “forgiveness” part of the plan. Applicants can get up to $10,000 forgiven (or up to $20,000 if they received a Pell Grant in college). “To be eligible [for forgiveness], [the applicant’s] annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households),” according to the Federal Student Aid website. It’s suggested that applicants submit their applications by November 15th, 2022 so that they get processed and their debt gets canceled before payments are unpaused.
Part Three is a proposed rule (not yet instituted) that would make future monthly payments smaller by requiring borrowers to pay no more than 5% of their monthly income, as opposed to the current 15%. It guarantees that people earning under 225% of the federal poverty level—about minimum wage—wouldn’t have to make monthly payments. It would also forgive balances of $12,000 or less after 10 years worth of payments, as opposed to 20.
This plan is set to help many people, including Amelia Whitcomb, an arts and business teacher here at OSA.
“If I wasn't a public school teacher, the standard forgiveness of $10,000 would really just be a small drop in the bucket of my very substantial graduate school student debt,” Whitcomb said. “The Public Service Loan Forgiveness, however, will make a huge difference because it will get rid of my debt altogether. Not having that hanging over my head would make a secure and stable future much more possible for me.”
Although helpful, this still isn't enough for a lot of people.
“Unfortunately, this debt relief is not going to make a sizable impact on my overall student debt burden. The amount that I had to finance throughout my two degrees is much much more than the $10,000-$20,000 that is being offered by the government. Although I am grateful for the relief that it is offering, the reality is that for people with large balances, this debt cancellation won't make much of an impact,” says J.L., who holds two degrees —undergraduate and graduate — both of which he took out loans for.
Still, there is work to do -- the average student debt among borrowers from the class of 2019 was $29,900, according to the Federal Student Aid website. Considering that the Biden administration recently scaled back the qualifying requirements for forgiveness, many people aren't going to get any relief at all. That means, even with the forgiveness, the plan leaves almost $10,000 dollars in debt among those who received Pell grants, and almost $20,000 among those who didn’t. This is only the lowest level of higher education, however. The average cost of a Master’s degree is $66,340. Someone who took out a loan for college and a full loan for a Master’s would, on average, owe just shy of $100,000 dollars. A $10,000 forgiveness plan would barely make a dent in that. This program may well be a step in the right direction: certain people, like Whitcomb, are getting bright new opportunities. For most, though, the overall conclusion is: it’s not enough.
On August 24th, 2022, President Joe Biden announced a plan to ease the Union’s collective student loan debt. As of September 7, 2022, this country's collective student loan debt totals more than $1.6 trillion, owed by approximately 43 million borrowers, according to Forbes’ latest report. This is a rightfully appalling number, and Biden’s plan—although it may not greatly relieve the overall debt—is meant to take a weight off the shoulders of people who are deeply in debt or are generally concerned about their ability to pay back their student loans.
As outlined by the Federal Student Aid office of the U.S. Department of Education, the plan is a three-pronged approach to relieving the debt crisis.
Part One of the plan is to extend the loan payment pause through the end of the year, with payments resuming on January 1st, 2023. The pause was instituted by Biden and Vice President Kamala Harris when they took office and has since been extended multiple times.
Part Two is the actual “forgiveness” part of the plan. Applicants can get up to $10,000 forgiven (or up to $20,000 if they received a Pell Grant in college). “To be eligible [for forgiveness], [the applicant’s] annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households),” according to the Federal Student Aid website. It’s suggested that applicants submit their applications by November 15th, 2022 so that they get processed and their debt gets canceled before payments are unpaused.
Part Three is a proposed rule (not yet instituted) that would make future monthly payments smaller by requiring borrowers to pay no more than 5% of their monthly income, as opposed to the current 15%. It guarantees that people earning under 225% of the federal poverty level—about minimum wage—wouldn’t have to make monthly payments. It would also forgive balances of $12,000 or less after 10 years worth of payments, as opposed to 20.
This plan is set to help many people, including Amelia Whitcomb, an arts and business teacher here at OSA.
“If I wasn't a public school teacher, the standard forgiveness of $10,000 would really just be a small drop in the bucket of my very substantial graduate school student debt,” Whitcomb said. “The Public Service Loan Forgiveness, however, will make a huge difference because it will get rid of my debt altogether. Not having that hanging over my head would make a secure and stable future much more possible for me.”
Although helpful, this still isn't enough for a lot of people.
“Unfortunately, this debt relief is not going to make a sizable impact on my overall student debt burden. The amount that I had to finance throughout my two degrees is much much more than the $10,000-$20,000 that is being offered by the government. Although I am grateful for the relief that it is offering, the reality is that for people with large balances, this debt cancellation won't make much of an impact,” says J.L., who holds two degrees —undergraduate and graduate — both of which he took out loans for.
Still, there is work to do -- the average student debt among borrowers from the class of 2019 was $29,900, according to the Federal Student Aid website. Considering that the Biden administration recently scaled back the qualifying requirements for forgiveness, many people aren't going to get any relief at all. That means, even with the forgiveness, the plan leaves almost $10,000 dollars in debt among those who received Pell grants, and almost $20,000 among those who didn’t. This is only the lowest level of higher education, however. The average cost of a Master’s degree is $66,340. Someone who took out a loan for college and a full loan for a Master’s would, on average, owe just shy of $100,000 dollars. A $10,000 forgiveness plan would barely make a dent in that. This program may well be a step in the right direction: certain people, like Whitcomb, are getting bright new opportunities. For most, though, the overall conclusion is: it’s not enough.