Staff Reports
President Joe Biden's decision to erase certain student loan debt for millions of Americans has been praised by activists and former students seeking relief, but borrowers must meet certain requirements in order to receive forgiveness.
Biden revealed the three-pronged proposal on Wednesday after weeks of deliberation. Borrowers and their advocates have been pressing the president for months for help with what may be crushing student loan debt. A number of people have voiced their approval of the new proposal, saying that it will help a lot of people. However, some have voiced their disapproval, saying that it will only help those with higher incomes who can't afford to pay back their loans.
An essential point brought up by the plan's specifics is: who can receive loan forgiveness and under what conditions?
There is an upper limit on salary. Annual income for borrowers is capped at $125,000, with no limit on household income. Similarly, only federal loans are eligible for loan forgiveness.
Moreover, up to $20,000 in debt might be forgiven for Pell Grant holders. If you qualify for a Pell Grant but didn't receive one, you may be eligible for up to $10,000 in loan forgiveness.
In the following weeks, the White House said it will develop a website where potential borrowers can submit their financial qualifications in order to apply for a loan. About 8 million former students are eligible for automatic relief because the Education Department has already their income information on file.
A college education should provide every person in America a leg up in assuring a bright future, Education Secretary Miguel Cardona said in a statement issued on Wednesday. Yet for a significant number of people, the burden of student loan repayment has prevented them from realizing their goals of homeownership, entrepreneurial success, and family provision. It is my firm belief that education is meant to liberate its recipients, not constrain them. To prevent borrowers from being put in an even more precarious financial situation as a result of the epidemic and to restore faith in a system that should be generating opportunities and not debt traps, we are implementing targeted relief measures.
There is a monthly payment cap built into the plan that could be helpful for graduates making regular loan payments out of their discretionary income.
More than $30 billion in student debt has been forgiven by the Biden administration due to the expansion of forgiveness programs to public servants, students with disabilities, and victims of fraud committed by for-profit universities.
But according to Dominique Baker, an associate professor of education policy at Southern Methodist University, Biden's idea shouldn't be the final word on revamping the United States' student loan system.
In an interview with NPR, Baker said, this would be one of the things when we talk about the necessity for large-scale overhaul of the student loan system. The first step has been taken quite successfully.
A suspension on student loan payments was also extended by Biden on Wednesday. When the COVID-19 pandemic hit the United States, officials decided to put things on hold to help people who were already struggling during the recession.
Originally set to terminate on August 31, Biden's extension means payments will continue in January.
On Wednesday, after Biden's statement, there was a significant increase in visits to two websites dealing with student loans: the Education Department's Federal Student Aid website and Nelnet, a major distributor of federal student loans. Heavy usage temporarily brought the department's website to a halt.
StudentAid.gov reported an uptick in visits after Biden made his announcement.
According to the White House, $1.6 trillion in federal student loan debt is held by more than 45 million borrowers. According to projections, as many as 43 million of those debtors will be eligible for loan forgiveness under Biden's plan, with roughly half of those alums having their outstanding debts completely canceled.
The preceding is a summary of an article that originally appeared on The Daily Cable.
