Last week, millions of student loan borrowers took a collective sigh of relief as the Biden administration announced yet another extension of the student loan repayment pause that now runs until December 31, 2022. In fact, this time the Administration went further by fulfilling President Biden’s campaign promise of forgiving student debt.
The Biden Administration announced, that they would cancel up to $10,000 in federal student loan debt for borrowers who earn less than $125,000 per year, or under $250,000 for married couples who file jointly. Borrowers in these income groups who also received a Pell Grant anytime in college will be eligible for an additional $10,000 ($20,000 total) in forgiveness. Click here to calculate how much of your student loan debt can be forgiven.
This decision could prove beneficial to student loan borrowers who owe small amounts in debt as there is a strong chance of their entire debt getting paid off. While the Biden administration faces criticism from the Republicans and some who fear student loan forgiveness will add to inflation, President Biden addressed the critics with a robust defense saying, “I will never apologize for helping America’s working class, America’s middle class, especially not to the same folks who voted for a $2 trillion tax cut that mainly benefited the wealthiest Americans and the biggest corporations”, “The outrage over helping working people with student loans … is dead wrong.” He was seconded by Former senior White House adviser Cedric Richmond who addressed critics saying, “everything doesn’t benefit everybody.”
However, this announcement which was kept on hold for almost two years and timed so close to the mid-term elections has created a series of questions as well. Was the decision kept pending intentionally from a political point of view? Is this loan forgiveness a temporary fix? Will student loan forgiveness be executed smoothly? This CNBC article addresses these and other questions.
While student loan forgiveness will bring relief to millions of borrowers, it is critical to keep in mind that forgiveness does not solve the student loan crisis. Student loan forgiveness or extension of repayment pause does not address the deep-rooted problem of massive tuition hikes that have become the norm in postsecondary education. On the contrary, this move could encourage colleges and universities to raise tuition costs furthermore since they will now know that the Federal Government can wipe out student loans with forgiveness programs. In short, educational institutions will continue to raise tuition and profit from taxpayer dollars.
It is admirable that the Biden administration has taken a step towards resolving the miseries of overburdened student debt holders. Unfortunately, that does not resolve the underlying problem of high education costs. We believe that the next step should be to address the underlying causes that are raising tuition and making college unaffordable by the day.
Unfortunately, for millions of college students today, the only way to achieve higher education is to get buried under a mountain of student debt. At Defynance, we are tackling the student debt crisis by refinancing and eliminating student loans with our debt-free income-based repayment solution. We also provide our customers with career support resources to help them grow in their professional life by optimizing income and minimizing unemployment. In this way, we invest in them by aligning our goals with theirs.
