On Wednesday, Aug. 24, President Joe Biden announced a long awaited plan to cancel up to $20,000 of student loan debt for millions of Americans.
The plan includes canceling $10,000 of student loan debt for borrowers with an annual income less than $125,000. Pell grant recipients who meet the annual income requirements will also be eligible for an additional $10,000 in student loan forgiveness.
Additionally, borrowers now only have to pay five percent of their discretionary income in order to repay their loan as opposed to ten percent, the intent being to make monthly payments more manageable.
“All of this means people can start to finally crawl out from under that mountain of debt to get on top of their rent and their utilities, to finally think about buying a home or starting a family or starting a business,” said Biden when announcing the relief plan. “And, by the way, when this happens, the whole economy is better off.”
This plan comes at a time when the average undergraduate student with loans graduates with about $25,000 in debt according to a Department of Education analysis. The federal student loan debt total is currently about $1.6 trillion with more than 45 million borrowers.
According to President Biden, nearly 45 percent of borrowers in the country–20 million people– can have their student debt fully canceled with this plan with about 90 percent of the eligible beneficiaries for the relief plan making under $75,000 a family.
While the Biden administration’s plan is a first step of acknowledging just how bad the student loan debt crisis has gotten, many feel that the plan does not go far enough to address the extent of the crisis.
At Drexel, where the average tuition is nearly $57,000 a year, some students feel that the plan is unsatisfactory.
Morgan Thomas, a senior double majoring in legal studies and finance, views the plan as unable to address the systemic causes of the loan crisis.
“At surface level it’s a good sentiment, but it really doesn’t make up for how loan institutions have taken advantage of those seeking education for decades—especially poor people that really lack the means. In addition, it isn’t nearly enough,” said Thomas. “If Biden wanted to start with a real difference, he could consider canceling the interest itself on student loans as opposed to one small sum that doesn’t sneeze at most people’s debt.”
Other Drexel students believe the plan is a nice gesture, but that it does not come close to providing meaningful relief for their student loan debt, particularly debt from private lenders.
“Drexel is super expensive and while it’s nice it’s barely doing much,” commented senior computer science major Josh Lusen. “It doesn’t even cover just the federal loans I’ve had to take out over 4 years.”
Across the country, Americans have had similar reactions to Biden’s decision, with some urging the president to cap interest rates instead or even to cancel more debt. Activist organizations such as the “Debt Collective” as well as progressive politicians like Senator Bernie Sanders are pushing Biden to go further with the student debt cancellation, urging the president to cancel all student loan debt in order to truly address the crisis for millions of Americans.
While not much is known about the process going forward, President Biden said that the Department of Education has been working on an application form for those who seek loan forgiveness and that the application process will become more clear in the coming weeks.