Biden loan forgiveness plan promises debt relief
Forgiveness plan has the potential to relieve $10,000 to $20,000 in debt per student
Days after the fall semester started, President Biden announced a student loan forgiveness plan that could alleviate the debt of millions of Texans.
The state’s more than $120 billion in federal student loans could be significantly reduced after an administration press release detailed $10,000 in forgiveness for individuals earning less than $125,000 and as much as $20,ooo for Pell Grant recipients.
Despite UTD’s history of generous academic scholarships and an almost billion-dollar endowment, a quarter of incoming freshmen and a third of overall undergraduates have taken out student loans according to the National Center for Education Statistics, amounting to roughly $23,000 when they graduate. Additionaly, tuition at UTD rose by 41% from 2012 to 2021.
Mass forgiveness could help UTD students and faculty dealing with extreme financial circumstances brought on by the pandemic and inflation by lessoning or completely erasing their balance before the end of the year.
Students such as Neuroscience junior Erin Lauraine have expressed support for the bill.
“I feel that this is definitely a good move,” Lauraine said. Policies like these are going to allow people more control over their livelihoods, she added.
Qualified UTD students can start applying in October by verifying their income with the Department of Education before Nov. 15 to beat the payment pause set to expire on December 31, 2022. Students wanting to receive updates on loan forgiveness ought to sign up for automated emails from the Department of Education’s website. Currently, applications will be accepted until the end of 2023, and relief should come within four to six weeks after applying, based on statements from an Aug. 26 tweet by Secretary Miguel Cardona. Moreover, according to the Federal Student Aid’s website, if your balance is less than the amount you qualify for, you won’t be able to pocket the difference.
Another implication for university students to enter the workforce is the Education Department lowering of the percentage borrowers have to pay each month based on their income.
Assistant Political Science Professor Thomas Gray said these loan payment rule changes could become more important in the long run.
“By changing the maximum you have to pay for loans acquired as an undergraduate from ten to five percent, [the amount of money received] could be well over ten thousand dollars for some people,” Gray said.
Forgiveness is also based on your financial situation while in school.
“It doesn’t look at who needs the money now. It looks at who needed the money when they were 17,” Gray said, pointing out why some feel the policy is not well targeted.
For example, a person making $124,000($249,000 for families) could see $20,000 come their way.
Even those who agree with the policy feel it doesn’t go far enough to hold universities accountable.
“This policy definitely addresses some of the immediate issues, [but] it’s not an end all be all solution,” Lauraine said.
“[College] is really skewed towards the working class and it’s pretty much designed to keep everyone either in debt or just becoming worker bees to where we’re either constantly paying off debt or constantly in this work cycle … it’s a form of indentured servitude.” Lauraine believes that we are beholden to institutions with significantly more resources.
History sophomore Connor Kinney believes student loans were problematic from the start and is skeptical of the new policy.
“Student loans were mishandled in the first place when they were government funded , now they’re half private and half government funded,” he said.
It’s impossible to cure a system that allows universities to charge more money and students will end up paying more, Kinney added.
After prominent conservatives, including Texas Senator Ted Cruz, vowed to bring lawsuits against Biden’s mass cancellation, some fear they won’t receive aid if republicans win either majority in the House or the Senate.
“Somebody has to bring a lawsuit … and has to be hurt,” Gray said, referring to politicians who call the move unconstitutional. “[You] can’t just not like it … the government has promised you something and you reasonably rely on it, we’ve formed a contract.”
Gray pointed out that Biden’s statements are an example of “reliance.” Effectively, the government is prevented from withdrawing a promise (i.e., forgiveness) once the policy is put in place. The loan servicing companies – the most likely to bring a suit – have until the beginning of October when the department starts processing applications.
“If it was struck down, I could see it not being reversed for those who had already finished but being stopped for anyone else and would also mean there wouldn’t be a round two,” Gray clarified.