On Aug. 24, the Biden administration announced that they would be canceling student loan debt. This decision has been met with controversy. Some are worried it won’t help the people who need it the most, while others are worried about how it will be paid for and how much it costs.
According to CNBC, Biden will cancel up to $10,000 of student debt for most that apply and $20,000 for those with Pell Grants. This policy also sets an income cap — those who make more than $125,000 per year won’t be able to participate.
The Department of Education has yet to release an application for this debt relief. It is said to be released sometime this October.
The White House measures eligibility by individuals alone, not household income. Meaning that individuals who make less than $75,000 per year will benefit the most from this decision, with 87% of the forgiveness distribution going to them.
There is a lot of concern about how much this relief plan will cost, and the Congressional Budget Office report released that it may cost up to $400 billion. This is not definite yet, as the White House has yet to release its own estimations. Despite this being just an estimate, it is raising a lot of worry about the cost of the debt relief plan.
While most students are grateful for this, some are not. Recently, there have been lawsuits against the Biden administration, namely from the Pacific Legal Foundation (PLF) which also filed a restraining order that was denied.
The plaintiff in this lawsuit is Frank Garrison, who, according to USA Today, is a public interest attorney currently employed by PLF. Garrison’s qualm is that he lives in Indiana, which is one of the states that will be taxing this relief as income.
The PLF “believes that Biden’s executive order is a huge[ly] ‘unlawful’ overreach that will cost taxpayers hundreds of billions,” as stated by USA Today.
Borrowers like Garrison from other states such as Arkansas, California, Minnesota, Mississippi, North Carolina and Wisconsin will be taxed if they plan to participate in this cancellation. This is where the PLF takes issue.
On their website, they highlight that the government advises those in Garrison’s position to opt out of the cancellation process, but they don’t believe this is a sufficient enough solution. They believe people like Garrison should be able to participate without being taxed.
There are a lot of pros and cons to passing this bill and definitely a few logistics that need to be straightened out. Overall, I think it will help give the middle class more breathing room when it comes to paying back their student loan debt. As a college student, I believe that debt relief plans like this are important and impactful in the lives of lower-income students. I am confident that the benefits this plan provides will outshine the overall cost to fund the debt cancellation.
jhammer@ramapo.edu
Photo courtesy of Monstera, Pexels.
