White House Admin to ‘Forgive’ up to $10,000 in Federal Student Loan Debt, up to $20,000 for Pell Grant Recipients Holding Federal Loans
This afternoon, President Biden announced he will be fulfilling his promise of cancelling up to $10,000 in federal student loans for students who make less than $125,000 per year. The President has continuously extended the loan payment moratorium since taking office, and has once again pushed back the date.
The Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 ($250,000 for married couples). No high-income individual or high-income household – in the top 5% of incomes – will benefit from this action. To ensure a smooth transition to repayment and prevent unnecessary defaults, the pause on federal student loan repayment will be extended one final time through December 31, 2022.
The White House — Press Briefing
The cancellation of student loans was promised to enable individuals “to climb out from under that mountain of debt,” as President Biden claimed in his press briefing earlier today, however, many critics believe it might do the exact opposite.
Over the past two years, as inflation has run rampant and prices of common goods have surged, the average American citizen is concerned with everyday affordability, not student loan “forgiveness.” In fact, only about 13% of Americans even have student loans to begin with. A common criticism of the debt-forgiveness model is the fact that lower income earners who opted-out of college all together, did not take out student loans, or have already paid them off, will end up paying higher taxes to fund the irresponsible lending and spending done by a mere 13% of Americans.
Another concern, is the fact that federal student loans are given to 18-year olds without hesitation, there is no degree requirement, or any expectations to meet. Students pursuing a degree in “undecided” are still eligible for a federal student loan, though they have no concrete plan to pay back the loan they agreed to.
For example: two students take out $5,000 in federal loans. Student A. pursues a degree with a poor employment outlook, Student B. pursues a degree in a STEM field. Student B. graduates, and immediately is earning above the income bracket for student-debt cancellation, and is no longer eligible for loan forgiveness. Student A. graduates, and is unable to find a high-paying job using their degree, the student is eligible for debt forgiveness. Student B. now gets taxed a higher percentage in order to contribute to the cost of Student A.’s loan forgiveness.
Additionally, the executive branch sets a dangerous precedent of overreach by canceling federal student debt in mass numbers. For example, The Hill writes, “If President Biden attempts to spend over $200 billion of taxpayers’ money without explicit approval from their representatives in Congress, and the courts uphold the move, they open the door for future presidents to usurp the power of the purse and unilaterally spend trillions more down the line.”
