President Joe Biden plans to make sweeping changes for students borrowing loans from the federal government, which could bring major relief to many young Americans.
In 2019, about a third of Americans under the age of 30 had student loan debt, according to the Pew Research Center. Average debt was $ 29,200 in 2018, according to the Institute for College Access and Success. Those with student loans are more likely to report having financial difficulties, according to Pew.
According to Federal Student Aid, an office of the Department of Education, outstanding student debt stands at over $ 1.5 trillion, owned by 42.9 million people. The government limits federal undergraduate student loans to $ 31,000 for students who receive contributions from their parents and $ 57,500 for independent students, according to the Brookings Institution.
“Those who owe more than that have almost always borrowed for higher education,” Brookings explained.
It’s important to quantify student debt, Brookings said. Most undergraduates complete their studies with low or modest debt. About 30% of undergraduates leave school debt-free and about 25% with less than $ 20,000, he reported.
“Despite horror stories of college graduates with six-figure debt, only 6% of borrowers owe more than $ 100,000 – and they owe about a third of all student debt,” Brookings wrote in January 2020.
The Biden plan
Under Biden’s plan, people earning $ 25,000 or less per year would not have to make loan repayments, and interest would not accumulate on these loans.
His plan does not say whether the income of $ 25,000 is based on the Free Application for Federal Student Aid (FAFSA), a US government app through which students apply for and receive federal loans. FAFSA loans are determined by the college attended and are calculated based on the income of the student and their contributing parents. It is not clear whether parents who claim and receive tax deductions for their dependents will lose this deduction.
Biden’s plan does not address the Direct PLUS loan which allows parents to take out loans for help undergraduate students pay for their graduate studies.
As its website states, those who exceed this cap will “pay 5% of their discretionary income (income minus taxes and essential expenses like housing and food) out of $ 25.00 for their loans.” People with both new and existing loans would automatically be enrolled in this income-based program.
After 20 years, those “who have made payments responsibly through the program will be 100% forgiven,” the site said. It is not explained what “responsible” means in this case.
For officials, Biden wants to create a program that “offers $ 10,000 in undergraduate or graduate student debt relief for each year of national or community service, up to five years,” according to his website. . Those who work in schools, nonprofits, and government will automatically be enrolled in this program.
A November 2020 Data for Progress survey questioned 1,087 potential voters on this plan. Of those who identified as Democrats, 48% strongly supported the idea; 26% of Republicans strongly opposed.
Biden’s plan includes fixing the civil service loan forgiveness program by passing the What You Can Do For Your Country Act 2019, led by Democratic Senators Tim Kaine and Kirsten Gillibrand, which would “guarantee millions teachers, social workers, members of the military, first responders, nurses, public advocates and many other public service professionals will qualify for the loan discount they earned. “
Biden will extend the emergency aid implemented in March 2020 by former Education Secretary Betsy DeVos until October, which suspended loan payments, halted collections on overdue loans and set interest rates at 0% for 60 days due to the pandemic.
Biden also announced plans to tackle college affordability. He plans to make college free for those whose families earn less than $ 125,000 a year. Biden also wants to double the Federal Pell Grant, awarded to students who demonstrate exceptional financial need. the the maximum amount of the scholarship is $ 6,345 for the 2020-2021 academic year and is not reimbursed.
The president said he wanted to take further steps to crack down on private lenders, expand the benefits of the GI Bill after 9/11, and invest in institutions serving students of color, such as historically black colleges and universities (HBCUs) and others in the service of minorities. establishments.
Other Democrats have argued for more extensive relief.
Since September, Democratic Senators Elizabeth Warren and Chuck Schumer have asked President Biden – by executive order – to write off $ 50,000 in federal student loan debt for borrowers under the Higher Education Act. The plan would ensure that there is no tax obligation for borrowers when canceling.
“For tens of millions of borrowers, student debt has become an impossible burden,” Warren said in December. “I just want to give you all a few numbers. Nearly 43 million Americans are buried under $ 1.5 trillion in federal student loan debt. Almost 9 million of these borrowers are in default.
At Columbia University, a private Ivy League school in New York City, students have staged a tuition strike.
Willem Morris, an organizer for the Columbia branch of the Young Democratic Socialists of America, said the students were inspired after seeing other Ivy League institutions cut tuition fees. In July 2020, Princeton announced that it 10% discount on tuition fees.
“But the students saw the concessions other schools are making and saw that Columbia again, was going to charge the same price for these Zoom courses in this economic crisis,” Morris told VOA. “And the students decided they didn’t want to take it anymore.”
More … than 4,100 students joined this tuition strike, according to Morris. Columbia had previously waived late fees for those who fail to pay their tuition on time, Morris explained.