President Biden announces plan to address student loan debt, experts and borrowers weigh in

SOUTH BEND, Ind. --- President Joe Biden announced on Wednesday a plan that addresses student loan debt. The new student loan forgiveness plan will forgive debt for some borrowers and extend the moratorium that paused payments due to the pandemic. The plan comes after a promise President Biden made during his campaign to provide student debt relief, and the goal is to provide breathing room for families as they prepare to start repaying their student loans in today’s economy. However, people are having mixed reactions about the bill, even borrowers themselves.

“We are part of an entire generation that is facing crippling debt like no one has had to face before because the cost of college is outrageous,” says Jennifer Weir, who is still paying off her student debts.

In an effort to improve the post-pandemic economy, the Biden administration announced a plan to help families with the burden of student debts. The plan will cancel a portion of borrower’s student debt and extend paused payments until 2023.

“For people who make under $125,000 a year and have federal student loans, they will have $10,000 of those loans forgiven. If they are a Pell Grant recipient and still fall under those same income guidelines, they will have up to $20,000 forgiven,” explains Phil Schuman, an expert in student debt and financial literacy at Indiana University.

The Department of Education is also proposing rules to further relieve borrowers.

“It maximizes the amount of money they have to pay on their student loans at 5% of their monthly income per month. That’s pretty big, because currently it’s 10%, that’s the cap, now it’s 5%. That’s awesome, so now potentially only have to pay half as much on their student loans,” Schuman says. “Students who fall within this could have their loans forgiven after ten years, rather than 20 years as it is currently. So, if a person makes ten years of on-time payments on this income-based repayment plan, they could have their loans forgiven in ten years.”

However, reactions are mixed about the plan from both borrowers and people who have already payed off their debts.

“I’m happy that some people are getting relief, but at the same time that doesn’t change the interest rates, it doesn’t change the cost of education, so it kind of seems like a kick in the can down the road,” Weir says.

While the plan doesn’t help in the long-run by making higher education more affordable, Schuman says it’s a good start to help those families that have been struggling financially.

“It doesn’t fix, necessarily the conversation of how are we going to make sure higher education is affordable moving forward, but I think for this moment this is a really good start,” says Schuman.

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