Right now in America, there are roughly 45 million people who are still paying off student debt. For many, student debt takes up to 20 years to pay off.
Many people struggle with this, and many politicians have tried to come up with a plan that could possibly lower the amount of student debt that college students will have coming out of college along with forgiving the debt that many people are still paying off.
President Joe Biden, who was inaugurated on January 20, has devised his own plan to make the price of college a little more forgiving.
However, many people have expressed concern over what exactly the plan is and whether or not it would really work.
Of course, at this point it is nearly impossible to tell if any student debt relief plan will be effective long term. Because of this, Biden has come up with several possible plans.
At the beginning of the pandemic, the office of Federal Student Aid began a temporary relief program that would promise loan forgiveness with no interest due to the sudden loss of jobs.
While the loan forgiveness was supposed to be a short lasting relief program, an executive statement released on January 20 let the American people know that Joe Biden is suspending the payments until at least September 30, 2021.
Too many Americans are struggling to pay for basic necessities and to provide for their families. They should not be forced to choose between paying their student loans and putting food on the table.The White House Secretary of Education
This loan forgiveness is optional, and for people who choose to continue paying off loans, they will save some money by still having no interest on the payments they make.
If all goes according to plan, President Biden hopes to make debt forgiveness a permanent thing. He plans to set certain opportunities in which student’s would be eligible for a cancellation of debt.
The execution of this plan is currently uncertain, but the circumstances he believes should allow for it are pictured below.
With this plan so uncertain, Biden also is pushing for Congress to instantly cancel $10,000 per person as a part of a COVID-19 relief. If this occurred, nearly 15 million American’s who owed less $10,000 or less would become debt free.
However, this would still leave the other 67% of borrowers with debt remaining, which is part of the reason that he has more than one plan.
Income Driven Repayment
While this type of debt forgiveness is not new, Biden has made many adjustments to the idea to hopefully make it more accommodating for graduates. If you are not familiar with this plan, here’s a graphic to explain the basics.
Basically, it allows for a graduate to pay back money based on income rather than a set price before you have even graduated. Many people see this as the most realistic option for alternate student loan option.
President Biden has a version of this. His version would make it so that only undergraduate loans would qualify. It would allow for approved students to 5% of a person’s discretionary income.
Students with less than $25,000 in borrowed money would have a monthly payment of zero. After 20 to 25 years, the loan would be forgiven and unlike current options for income-driven repayment, Biden’s plan would be tax-free.
Finally, Biden’s version of this would be automatic for anyone who borrowed money for college. So if someone did not want to repay money in this method, they would have to opt out.
Free College Tuition
President Biden has proposed making college free to more students who need it.
His current proposal would make public college or university free to any student living in a family that makes less than $125,000 a year.
Private minority serving schools such as historically black schools and tribal colleges would also provide free tuition for at least the first two years through grants.
Finally, it would make all community college free for the first two years provided that the student had not pursued a secondary degree before that.
With these free college options, the student would still be responsible for payments such as room and board and textbooks. However, this option would hopefully reduce the money that students would need to pay by a significant amount.
While President Biden does have a few other plans that could potentially lower prices for future students, experts say that loan forgiveness, free college, and income driven repayment are the most likely to actually put an end to the insufferable debt many Americans are currently facing.
Hopefully, we will know more about these options soon, with Congress constantly trying to make changes to the system, there is always new information coming out.