On Aug. 24, President Joe Biden announced a new student loan relief plan, effective through Dec. 31. A maximum of $20,000 will be forgiven from the debt owed by certain individuals, if eligible.
“I think it’s a great step in the right direction,” said senior Julia Hardesty. “However, I anticipate many students may not get the assistance they need due to not fitting the criteria for forgiveness.”
The cumulative federal student loan debt is $1.6 trillion and continues to increase, according to a fact sheet published by the White House.
“The Biden Administration is following through and providing families breathing room as they prepare to start re-paying loans after the economic crisis brought on by the pandemic,” the White House said in a statement.
This plan was put into place as an attempt to help families financially, primarily due to the lasting economic changes that the Covid-19 pandemic has caused.
“The richest have pulled further ahead. Work-from-home advantages skew to educated professionals,” stated an article from Bloomberg. “Low-income workers are winning pay raises in a tight labor market—but inflation is eating away at their gains.”
The student loan forgiveness plan is organized into 3 parts. The first is the continuation of the pause of loan repayment. All loan debt has been paused with a 0% interest rate since this policy began in March 2020.
Individuals with annual incomes of less than $125,000 and households with less than $250,000 are eligible to have their loans compensated for.
Any Federal Pell Grant recipient who fits these qualifications and has yet to fully pay off their student loans can have $20,000 subtracted from their debt.
The relief also applies to those who did not receive a Pell Grant, but only with a maximum of $10,000 removed. This is considered the second part of the Biden-Harris administration’s proposed course of action.
“Theoretically, this will allow individuals with less debt to have greater ability to buy a new home, a new car and to be a more active consumer,” said Dr. Gary Rose, Chairman of the Department of Government.
The third step of the plan is to make the student loan system more manageable for current and future borrowers, according to the Federal Student Aid (FSA) website.
Up to 43 million borrowers will be relieved, including a complete remaining balance being deducted for approximately 20 million, the White House fact sheet stated.
“I believe President Biden has exceeded his constitutional authority,” Rose said. “There is nothing in the Constitution which gives the president unilateral power to cancel student loans issued by the Department of Education.”
The Higher Education Relief Opportunities for Students Act of 2003 (HEROES) “authorizes the Secretary of Education to waive or modify any requirement applicable to the student financial assistance programs as deemed necessary with respect to an affected individual who suffered direct economic hardship as a direct result of a military operation or national emergency.”
The Biden-Harris administration cited the HEROES act as means of explanation for the legality behind the loan relief plan.
“Student debt relief does not mean the money that was owed has magically disappeared,” said Rose. “It will be the middle class to pay the tab, as the middle class always does.”