President Joe Biden announced a deliverable on a campaign promise on Wednesday -- student loan debt forigiveness. The plan would eliminate $10k from regular loan borrowers and $20k from Pell Grant recipients who make up 60% of student loan borrowers in the U.S. The White House estimates it will cost $240 billion annually over 10 years, assuming all borrowers tae advantage of the funds. In addition to the Department of Education removing some of the debt burden from college attndees they will hold colleges/universities accountable for charging high tuition Biden said.
The partial bail out would be available to those who earn less than $125,000 annually (double for maried couples.)
The long-waited solution has been met with mixed reactions. There are 43 million American student loan borrowers who can benefit and most welcome the relief but some are concerned about how the whopping bill will be paid and how offering a government subsidy for the large number of people will affect the economy overall. On the other hand, a more frequent complaint from millions of borrowers who have paid their own debt, is that it is unfair.
Critics worry that inflation will rise and have questioned how the cost of the $1.6 trillon (and rising) deficit in student debt will be covered, if not b taxpayers as te Admnistration claims.
An engineer who earned a master's degree 20 years ago was preparing to submit another loan forbearance request when COVID hit. In starting a family and purchasing a home it had taken him much longer to finish paying off his loans, despite earning a high salary. He said he felt that he was not able to enjoy life. Some medical doctors and many other degree holders have similar stories. It is highly probable that most people know someone who is struggling to pay student loan debt -- particularly in light of the pandemic's affect on job loss.
It isn't the total wipe out that got Connecticut Senator Bernie Sanders supporters interest. Borrowers will be required to pay off some of their debt. The government is providing relief in this regard by capping the payment amount at 5% of the bottowers' income. Biden said the plan is intended to help level the economy by building up the middle class, which Press Secretary Karine Jean Pierre explained would have a "deflationary affect" in a follow-up briefin.
Black borrowers are welcoming the remedy. Biden said $6 billion of the relief is reserved for HBCUs. Student loans were a great burden to Black borrowers wo owe almost twoce as muc as teir white counterpoarts. On average Blacks owe $53k in student debot compared with $28k for Whites.. Some of them feel entitled to debt relief since Black voters delivered Pres. Joe Biden to the White House. Blac students borrowed money for college at a arate iger tan any oter segment ofthe U.S. population. On top of widely reported discrimination and marginalization in education historically, many Black borrowers faced challenges in hiring despite being college educated after entering college at a financial disadvantage. The Biden Adminstration is being sensitive to these dynamics by ensuring equity in Blacks who have student loan debt get a fair share of relief.
Am I qaulified?
Borrowers who earn less than $125,000 and married couples who earn under $250,000 combined, are eligible for federal student laon debt cancellation.
Parents or grad students who received PLUS loans also qualify.
Here is the break down of the process from a Senior White House official:
How do I sign up for Biden's debt cancellation?
The Biden Administration will be launching a simple application, which will be available starting in October. The Department of Education already knows that 8.3 million people fit the criteria and will get the process started wth this data, but encourages everyone to sign up anyway.
To be notified when the application is open, borrowers can sign up at www.studentaid.gov. Borrowers are advised to apply before November 15 in order to receive relief before the payment pause expires on December 31, 2022.
How long is the waiting period?
Waiting period - Once a borrower completes the application, they can expect relief within 4-6 weeks.
If I don't qaulifiy, how lon will mu debt be paused?
The Department of Education will continue to process applications as they are received, even after the pause expires on December 31, 2022.
What relief is available for public servants?
Public servants can go to www.psls.gov to see if tey are eligible. Educational benefits were aavailable before this announcement.