Since the beginning of his presidency, President Biden has put student loan forgiveness at the forefront of his administration’s platform. Education plays a crucial role in shaping the future of a nation, enabling individuals to attain their potential and contribute to society. However, the rising cost of higher education has led to a staggering amount of student loan debt in the United States. With student loan debt soaring to unprecedented levels, surpassing $1.7 trillion, President Biden’s plan comes as a response to the urgent need for reform in the nation’s education financing system. The ballooning debt burden has hindered economic progress for many Americans and raised concerns about equitable access to quality education.
In June, the Supreme Court halted President Biden’s student loan forgiveness program. Saving on a Valuable Education (SAVE) was enacted after the President announced that his administration would explore another route to deliver some student debt relief, revamping the existing Revised Pay As You Earn (REPAYE) plan to adjust monthly payments based on income levels. It also offers the lowest monthly price of any Income-Driven Replacement plan available, ensuring greater accessibility and effectiveness. A percentage of your discretionary income, currently 10%, determines monthly payments for the SAVE plan, just as with REPAYE.
President Biden also aims to enhance the Public Service Loan Forgiveness program, encouraging individuals to work in public service jobs. The plan calls for expanding the program’s scope and simplifying the application process, addressing concerns that have led to the denial of forgiveness for many eligible applicants. On August 14th, the White House announced that 804,000 borrowers who have been in repayment for over 20 years begin to see their student debt canceled. Over 614,000 will have their remaining federal student loan debt canceled once this action is complete.
The President’s student loan plan has sparked a range of reactions from various quarters. Supporters, including California Governor Gavin Newsome, hail the proposal as a much-needed step toward addressing the crippling student debt crisis and improving the accessibility of higher education for all Americans. Newsome previously called for the California State Legislature to not mandate state income tax on up to $20,000 in federal debt forgiveness. Advocates argue that the plan could have far-reaching positive effects on the economy, allowing graduates to invest in homes, businesses, and other market areas.
However, critics express concerns over the potential financial implications of the plan, questioning its feasibility and impact on the federal budget. Just two weeks after the supreme court’s decision, The Cato Institute and Mackinac Center for Public Policy filed a lawsuit against the Biden administration, citing a violation of federal law by avoiding the traditional process for forgiveness policy. Additionally, some skeptics worry about the possible consequences of large-scale debt forgiveness on borrowers’ sense of personal responsibility. “Today’s celebration of counting no payments as payments is just the latest example of the ongoing delusion at the White House,” said Rep. Virginia Foxx (R-NC) chairwoman of the House Education and Workforce Committee, in a statement. “The Biden administration’s blatantly political attempt to circumvent the Supreme Court is shameful. The Biden administration is trampling the rule of law, hurting borrowers, and abusing taxpayers to chase headlines.”
As President Biden’s student loan plan takes center stage in the national conversation, it marks a significant effort to transform how Americans access and finance higher education. The proposal’s multi-pronged approach holds the potential to alleviate the student loan debt burden and foster a more equitable educational landscape. As the plan advanced through the legislative and judicial process, individuals, policymakers, and academic stakeholders have closely watched its outcomes nationwide. As of August, the Biden administration has canceled more than $116 billion in student loans for 3.4 million Americans, according to the Education Department.
