Biden’s Plan for Student Debt Forgiveness: A Solution or Quick Fix?

College graduates thanking President Biden for the debt relief, Source: Truthout.org

This fall, forty-three million Americans are eligible to apply for public student loan forgiveness. The Biden Administration announced the debt relief plan in August and applications opened in October via Federal Student Aid (FSA). The objective of Biden’s plan is to alleviate economic stress on low and middle class families struggling after the pandemic. This means that only individuals earning less than $125,000 annually are eligible for forgiveness. Applicants will receive a cancellation of $10,000 if they did not receive Pell Grants and $20,000 if they were a Pell Grant recipient (low-income families). Further, those who have worked in public service for ten years, including non-profit and governmental work, are eligible for total debt forgiveness.

President Biden’s targeted approach to student debt forgiveness appears to make good on his campaign promise to help cancel student debt for vulnerable families. The Department of Education’s analysis behind the directive has found that 87% of loan-forgiveness benefits will be directed to those earning less than $75,000 per year. Additionally, it found the policy to help borrowers of various age groups, with 21% being 25 years and under, 44% between the ages 26 and 39, and the remaining recipients being over 40 years old. Black students are twice as likely to receive Pell Grants as their white counterparts and are more likely to take out larger loans. Taking this into account, Biden’s policy also helps to advance students of color beyond college. 

In spite of its lofty aspirations, the plan has received criticism for its approximately $400 billion price tag. Opponents of the debt forgiveness plan fear the future repercussions on taxpayers due to the increase of the United States National Debt. As Republican congresswoman Virginia Foxx states, “millions of hardworking taxpayers will be forced to shoulder the financial burden of this scheme if it is not stopped.” This is a reasonable fear to have with inflation and the current housing shortage hiking up monthly bills. Additionally, opponents of debt forgiveness believe that forgiving debt via executive order sets a harmful precedent of government reliance. Based on this logic, future borrowers will take out higher loans, assuming another cancellation in the future. However, the failure of Congress to adapt the Department of Education’s policies in order to make secondary education possible for everyone seems to be more concerning. This is due to the lack of any increase in grant amounts given by FSA to counter the increase in college tuition. While the cost of public and private institutions alike has nearly tripled (with account for inflation), Pell Grants, which once covered 80% of tuition, now only cover around 30%. This gap leaves students with financial need at a crossroads when deciding whether or not to attend university.  The question then becomes whether attaining a college degree will produce more utility than the mountain of debt it places in front of those striving for financial independence. This college debt dilemma may continue to spread if no action is taken to counterbalance this increase in tuition. 

While the Income-Driven Student Loan Forgiveness Act will help many Americans today, it simultaneously admits the inherent need for change in our Department of Education. If Americans want to see a future with growing numbers of college graduates, we have to act now. Congress must be urged to make longstanding policy on the student debt crisis rather than create more short-term fixes.